Tobenna Udeagu V. Benue Cement Company Plc. (2005)

LawGlobal-Hub Lead Judgment Report

SANUSI, J.C.A.

The appellant as plaintiff, filed a writ of summons against the defendant company as respondent herein, claiming the undermentioned reliefs as per his amended statement of claim and his amended writ of summons. The reliefs sought by the plaintiff/appellant against the defendant at the Benue State High Court, sitting in Otukpo (the lower court) are as follows:-

(i) Loss of profit per month at the rate of N117.60k per bag for 2400 bags for one month, that is, two hundred and eighty thousand, two hundred and forty naira (N280,240:00k).

(ii) Loss of profit to the plaintiff is ten million, one hundred and sixty thousand, six hundred and forty Naira (N10,160,640:00k) at the rate of N282,240:00k per month.

(iii) Particulars of loss suffered by plaintiff as special damages are as follow:-

(a) Rent paid for warehouse at the rate

of N3,000 per month for 36 months … N108,000.00k

(b) Salaries of four staff at the rate

of N500.00k per month (N2,000.00k) for 36 months …..N72,000.00k

(c) Deposit paid N30.000.00k

Sub Total N210,000.00k

General Damages N10.160.640.00k

Total N10.370.640.00k

The facts that gave rise to the action at the lower court can be summarized thus:-

The defendant/respondent company advertised in a newspaper called “Voice’, inviting people to place tender for appointment as distributors of their product i.e. brand of cement called “Lion”. On reading the advertisement, the plaintiff became desirous of being a distributor of the respondent company, hence he applied to the defendant/respondent company and was ultimately appointed a distributor in category “B” vide a letter written to him by the company which was exhibited at the trial as exhibit ‘A’. In the said letter, he was advised to sign a formal agreement with the defendant company and was also directed to pay N30,000.00k deposit after which the defendant would be supplying him with 120 tones (i.e. 2,400 bags) of “Lion” cement monthly. He complied with the directive and paid the N30,000 deposit which said sum was also accepted by the defendant and a receipt exhibit B, was issued to him by the defendant as evidence of payment of the deposit. Again as directed, the plaintiff/appellant signed a formal agreement with the defendant wherein it was also stated that the duration of the contract agreement for the distributorship was to last three years (or 36 months).

On 1/9/1993, the plaintiff was issued with allocation paper (exhibit C) for the months of September, October, November and December, 1993. Sequel to that, the plaintiff alleged that he rented a warehouse for the three years duration of the contract at the rate of N3,000 per month and employed three sales boys and a sales girl and fixed them on monthly salary of N500.00k each. To his utter dismay, the plaintiff said that he on 23/12/1993 read in the same “Voice” newspaper that his distributorship agreement was terminated by the defendant company without any reason. Disenchanted with that development, the plaintiff decided to sue the defendant company at the lower court and sought the aforementioned reliefs. Pleadings were ordered, filed and exchanged by both parties. Hearing later commenced in earnest and in the end the lower court found against the plaintiff in favour of the defendant company.

Aggrieved by the decision of the lower court, the plaintiff appealed to this court. In compliance with the practice obtained in this court, briefs were filed by parties. The appellant’s brief of argument was filed by his counsel and in the said brief of argument, two issues for determination of the appeal were identified and the Issues are:-

(1) Whether on a proper consideration and interpretation of exhibits ‘A’, ‘B’ and ‘C’ in this case, there exists an enforceable contract between the appellant and the respondent. (Tied to grounds 1 and 4).

(2) If the answer to issue 1 above is in the affirmative, was the appellant entitled to the items of reliefs claimed by him? (Relates to grounds 2 and 3).

The respondent on the other hand did not propose any issue for determination separate from those formulated by the appellant but it instead adopted the two issues contained in the appellant’s brief as set out above. Naturally, I have to be guided by the appellant’s briefs of argument in determining this appeal. I intend to consider the two issues seriatim in treating the appeal.

On the first issue for determination, it was submitted on behalf of the appellant that from the contents of exhibits ‘A’, ‘B’ and ‘C’ there was a valid and enforceable distributorship contract entered into between the two parties. He argued that these three exhibits gave rise to the signing of formal contract agreement and the respondent/ defendant never denied the existence of these exhibits or denied issuing them either in their pleading or oral evidence, hence they should be taken as having been admitted by the defendant. See Joseph Mangtup Din v. African Newspapers of Nigeria Ltd. (1990) 3 NWLR (Pt. 139) 392 at 405. He added that in the circumstance of this case, there was an offer and acceptance which crystallized into a binding contract agreement between the two parties which was also clearly demonstrated by the conduct of the parties, their words, action and the exchange of correspondences. See Majekodunmi v. National Bank (1978) 3 Sc. 119 at 129; Union Bank of Nigeria v. Prof Albert Ojo Ozigi (1991) 2 NWLR (Pt. 176) 677 at 694. He added that words contained in documents or correspondence should be construed by court as they stand in deciding whether two parties have reached consensus or agreement on what the parties are bound by. See Nwangwu v. Nzekwu (1957) SCNLR 61; Amizu v. Nzeribe (1989) 4 NWLR (Pt. 118) 755. He finally submitted on this point, that on proper construction of exhibits ‘A’, ‘B’ and ‘C’ and the oral evidence given on the contents of the contract agreement which was signed and taken away by the respondent, there was an enforceable distributorship agreement duly entered by the parties which the respondent/defendant withheld and that such contract agreement was breached by its publication in the “Voice” Newspaper of 23/12/93 that the said contract had been revoked. See Obaike v. Benue Cement Company Plc. (1997) 10 NWLR (Pt. 525) 435 at 448/449 A-E.

On his part, the learned Counsel for the respondent submitted that exhibit A was a letter of provisional appointment as distributor only by its paragraph one. He said paragraph 2 of same stated that there was the necessity of signing an agreement with the company (defendant) upon acceptance of the provisional offer of appointment. He said since the appellant admitted that the defendant had got to sign and seal the agreement which he (appellant) had claimed to have signed, the trial Judge was right in his finding that there was no formal contract agreement signed by both parties as there was no mutual assent, hence there was no enforceable contract binding the parties. He said where a party alleges the existence of a fact. The onus is on him to show or prove such facts. See Okubule v. Oyagbola (1990) 4 NWLR (Pt. 147) 723 at 736 D; Coker v. Ajewole (1976) 1 NMLR 178 at 183; Innih v. Ferado Agro and Consortium Ltd. (1990) 5 NWLR (Pt. 152) 604 at 627 (E -F); Petroleum Training Institute v. Uwamu (2001) FWLR (Pt. 70) 1567 at 1578/1579, (2001) 5 NWLR (Pt.705) 112. He further argued that in contract agreement, the offeror has a duty to establish that the offer was accepted by the offeree in accordance with the mode stipulated, if the mode of acceptance is specified in offer. See Afolabi v. Polymera Industries (Nig.) Ltd. (1967) 1 All NLR 144; Petroleum Training Institute v. Uwamu (supra). The learned Counsel for the respondent further submitted that in the instant case, the essential ingredients of enforceable contract were absent due to lack of signing and sealing of the written agreement forming the foundation of the relationship between the parties as recited in exhibit A, as well as the lack of acceptance of payment by the defendant/respondent company. See also, UBA Ltd. v. Tejumola & Sons Ltd. (1988) 2 NWLR (Pt. 79) 662 at 700 (C-D). It is not in dispute between the parties that exhibit ‘A’ which was tendered and admitted in evidence at the trial without any objection from the defendant is a letter by the defendant/respondent wherein it appointed the appellant as a distributor of cement of the defendant company. The defendant/respondent had admitted the facts conveyed in the exhibits A, B and C both in its pleading and oral evidence in court through its sole witness. It is trite law, that facts admitted need no further proof. (See section 74 of Evidence Act). See also Okparaeke v. Egbuonu (1941) 7 WACA 53; Nwizuk v. Eneyok (1953) 14 WACA 354; Din v. African Newspapers Ltd. (supra).

It is instructive to note that paragraphs 2, 3 and 6 of exhibit ‘A’ explicitly made clear the purport of the letter of appointment. The relevant paragraphs are reproduced hereunder:

Para. 2-

“If you accept the offer, you must on or before the 31/8/93 come to the office of the Assistant General Manager (commercial) at the factory premises and sign an agreement with the company.

Para. 3 –

On signing the agreement, you are required to pay a deposit of N30,000.00k and in addition pay for 120 tones being your probable monthly allocation actual delivery however, depends on availability.

Para. 6-

Other conditions for your appointment are contained in the agreement referred to in paragraph 2 above.”

(emphasis mine)

To my mind, exhibit ‘A’ amounts to an offer and since the offeree complied with the stipulations or conditions stated therein, the important factors that make a contract binding or enforceable can be said to have been concluded. In the instant case, uncontroverted evidence abound that the appellant paid the N30,000.00k deposit vide exhibit ‘B’. The plaintiff/appellant also led evidence showing that he had reported at AGM (commercial’s) office, where he signed an agreement. Although, the agreement was not tendered at the proceeding because the respondent refused to produce it despite being served with appropriate notice to do so, the trial court was in my view, very correct in allowing the appellant to give oral evidence of its contents. See Da Rocha & Anor. v. Hussain (1958) 3 FSC 89 at 92, (1958) SCNLR 280; Olanrewaju v. Gov. of Oyo State (1992) 9 NWLR (Pt. 265) 335. The learned Counsel for the respondent however argued that since by paragraph (6) other conditions contained in the agreement must be fulfilled, it could not therefore be correct to say that the contract agreement was really assented to as there was no evidence that it was signed by the defendant as alleged by the plaintiff/appellant. It is noted by me that when the trial court allowed the plaintiff (appellant) to give oral evidence on the contents of the agreement which the defendant/respondent withheld, the former testified that he signed the contract and gave same to the respondent to sign and the respondent undertook to send copy to him but did not do so despite his (plaintiff’s) demand.

I think in the surrounding circumstance the lower court should have presumed under section 149(a) and (d) of Evidence Act, that the respondent withheld the production of the agreement the appellant said he signed and gave to the defendant to sign, because if the latter had produced it, it would be unfavourable to it. See In Re: Adewunmi & Ors. (1988) 3 NWLR (Pt. 83) 483 at 500; Agbonifo v. Aiwereoba (1988) 1 NWLR (Pt. 70) 325 at 342.

The learned trial Judge at page 48 lines 16 – 23 in making comparison and evaluation of the testimonies of PW 1 (the plaintiff) and that of DW 1, the sole witness called by the defendant, the lower court found as follows:-

“It is for these reasons that I believe the oath of the plaintiff and reject DW1’s oath to find as a fact that the plaintiff signed the formal agreement for the distributorship in the office mentioned in clause 2 of exhibit ‘A’. His evidence that upon signing the formal agreement, defendant’s agent took the two copies of it away for their signature and sealing never to return his copy back to hi m were uncontradicted and unchallenged. DW1’s evidence did not cover it as well as the averments in the statement of defence. Accordingly I find, these facts proved. (Italics emphasis mine).

I note with regret, and I am even bewildered as to why the learned trial Judge after finding the facts proved as he stated above later, somersaulted and ate his own words and held on the same page 48 lines 25 – 25 as below:-

“The onus was on plaintiff to prove that Defendant Company signed the formal agreement. He failed in that regard. Mutual assent of both parties was needed to conclude the contract. I find no evidence of the mutuality of assent for materialization of the negotiations started in exhibit ‘A’. Based on the absence of the meeting of their respective minds in respect of the formal contract of distributorship which was to be struck by the plaintiff and defendant company jointly signed a contract document, I hold that no enforceable contract was made thereby”.

The sudden U-turn or somersault by the learned trial Judge in the above finding is perturbing. Why he contradicted himself is what still remains very unclear to me. Your guess as to why he did so is as good as mine.

Be that as it may, and with due respect to the learned trial Judge, a proper evaluation of the evidence adduced by the plaintiff e.g. exhibit ‘A’ clearly showed that the plaintiff was to go to AGM (commercial) office to sign the agreement and he confirmed that he went there and did sign the agreement. Although, DW1 said no agreement was signed, the question is “Why did the company send the letter of allocation of cement to him i.e. exhibit ‘C’, if no such agreement was reached? Again, on the number of cement allocated to the plaintiff i.e. 180 bags for the three months, I think that point is of no moment since by paragraph 3 of exhibit ‘A’ it was stated that “actual delivery however depends on availability” of the product. Therefore, it is immaterial to say that because 180 tones were allocated to the plaintiff/appellant by the defendant/respondent there was no enforceable contract agreement. By paragraph 3 of exhibit A, the defendant could allocate any quantity below the monthly allocation of 120 tones it undertook to be supplying the plaintiff depending on the availability of the product. If there had not been an enforceable contract between the plaintiff/appellant and the defendant/respondent, the latter company would not have sent letter of allocation i.e. exhibit ‘C’ to him. To my mind, by sending the letter of allocation to the appellant, it can be inferred that there had been a binding and enforceable contract agreement between the two parties. For the defendant/respondent to refuse to accept payment for the quantity of the cement it allocated to the appellant and then proceed to terminate the contract on pages of newspapers, I think the defendant company is in breach of the contract agreement of distributorship. By the contents of exhibits ‘A’, ‘B’ and ‘C’, I am of the view that an enforceable contract between the appellant and the respondent existed. I therefore resolve the first issue in favour of the appellant herein.

On the second issue for determination which relates to claim of damages, the learned Counsel for the appellant submitted that in cases of breach of contract, assessment of damages is calculated on the loss sustained by the injured party, which loss was either in the contemplation of the parties or the unavoidable consequences of breach. He cited the cases of Shell B.P. v. Jammal Engineering Ltd. (1974) 4 Sc. 33; Ijebu Ode L.G. v.Adedeji Balogun & Co. (1991) 1 NWLR (Pt. 166) 136 at 158. The learned Counsel also submitted that all the claims for damages made by the plaintiff/appellant were not only pleaded, but also were duly proved by evidence. He also said that the respondent/defendant did not deny any of such claims but even admitted them and the lower court made its finding in that regard even though it refused to award the damages claimed by the plaintiff/appellant.

The learned appellant’s counsel further argued that the learned trial Judge was wrong when he held that the appellant ought to have mitigated his loss on seeing exhibits L and L2 i.e. the newspaper revocation of the contract agreement. He cited and relied on the cases of Obaike v. Benue Cement Co. Plc. (1997) 10 NWLR (Pt. 525) 435 at 448/449; Maximun Insurance Co. Ltd. v. Owoniyi (1994) 3 NWLR (Pt. 331) 178 at 195 C-D; Onwuka v. Omogui (1992) 3 NWLR (Pt. 230) 393; Kosile v. Folarin (1989) 3 NWLR (Pt. 107) 1.

The learned Counsel for the appellant also submitted that the appellant led credible and uncontroverted evidence to prove all the losses or damages he claimed. He said the onus is on the respondent to prove that the appellant’s losses could have been avoided, which onus the respondent had failed to discharge. He cited A.-G., Oyo State v. Fairlakes Hotels (No.2) (1989) 5 NWLR (Pt. 121) 255 at 284 para. G. On that note, the learned appellant’s counsel urged this, court to award all the damages he claimed since he had established his case.

The learned Counsel for the respondent in his reply, submitted that the plaintiff/appellant was not entitled to the damages he claimed since it is trite law that where there is no enforceable contract no damages can flow since there is no any breach. See Orient Bank of Nigeria Plc. v. Bilante International Ltd. (1997) 8 NWLR (Pt. 515) 37 at 95; Petroleum Training Institute v. Uwamu (supra).

He further submitted that the plaintiff must always take all reasonable steps to mitigate the loss caused to him consequent upon the defendant’s wrong and can not recover damages for any such loss which he could have avoided by his action or inaction. He relied on Okongwu v. NNPC (1989) 4 NWLR (Pt 1I5) 296 at 319 F-G. He said in this instant case, the plaintiff failed to take steps to mitigate his loss upon the repudiation of the contract by the defendant which he had notice of vide exhibit 1.The learned Counsel for the respondent also argued that the respondent company, was never informed about the transactions such as the hiring of shop, employment of staff etc. I had, when treating the first issue for determination, held that from exhibits A, B and C and the entire surrounding circumstances of the instant case there had been a valid and enforceable contract agreement entered into by the two parties. It had also been proved by the appellant that the defendant/respondent had breached the said contract by its action and the revocation of same. It goes without saying therefore, that damages for breach must accrue since damages I for breach of contract is aimed at restoring the plaintiff as far as money can do, into his previous position in which he would have been if the breach had not occurred. In other words, damages in breach of contract is restitutio in integrum (see Universal Valcanising (Nig.) Ltd. v. IUTTC (1992) 9 NWLR (Pt. 266) 388). The rule governing the award of damages for breach of contract is that, where the parties have made a contract and one of them breached same the damages which the other party ought to receive in respect of the breach should be as may fairly and reasonably be considered either as arising naturally, i.e. according to the usual course of things from the breach itself, or such as may reasonably be supposed to have been in the contemplation of the parties at the time they made such contract as the probable result of the breach of it. See Kusfa v. United Bawo Construction Co. Ltd. (1994) 4 NWLR (Pt. 336) 1; Taiwo v. Princewill (1961) All NLR 240; FBN Plc. v. Excel Plast. Ind. Ltd. (2003) 13 NWLR (Pt. 837) 412; UBA v. Folarin (supra).

It is on this premise, that I deem it necessary to consider each of the items of claims for damages made by the appellant/plaintiff and determine which of them he is genuinely entitled to. In the first place, the appellant claimed N282,240.00k as loss of anticipated profit for 2,400 bags of cement at the rate of N 117.60k per bag of cement. I am of the view that he is not entitled to such claim since the defendant company stated in clause 3 of exhibit ‘A’, that such supply of cement depended on the availability of the product. It would therefore appear to me unrealistic for the appellant to claim damages on same for a projected period of three years. Since the defendant had in clause 3 of exhibit ‘A’ said the supply was conditional, I do not deem it proper for the plaintiff/appellant to make such projected claim. To me, the only period on which his claim could be accommodated is from 23/8/1993, (the date the contract agreement commenced) to the 23rd December, 1993, (the date he read about the termination or repudiation of the contract by the defendant/respondent). In otherwords, for a period of four months only. That is to say N282,240.00k per month for 4 months totaling N1,128,960.00k. On the rentage of warehouse claimed for a period of 3 years, I equally regard it as unreasonable. I am unable to see the necessity for the plaintiff to continue to be paying for empty shop for such whole period knowing fully well that the purpose for renting such shop no more existed with the termination of the contract. The period should also be limited to four months only at N3,000.00 per month totalling to N12,000:00k. As for the N30,000.00 deposit, the plaintiff/appellant is surely entitled to the refund of same. With regard to the salary for the four staff employed by the appellant for 36 months at N2,000.00 per month, I also do not see the justification for the claim for up to 36 months. Although, there is evidence adduced by the plaintiff/appellant that he entered into contract for employment of the four support staff, there is no evidence shown that they were paid in advance for the whole 36 months as it will even be unreasonable and unwise for him to pay for the 36 months in advance. The plaintiff testified even, that they were being paid on monthly basis. I therefore, do not see any wisdom for him to continue paying the four staff their monthly salaries beyond 23/12/1993 when he learnt of the termination of his contract by the defendant/respondent company. For him to continue paying them is to me preposterous since they had nothing doing for him. The contract agreement being that of employment, can be terminated by either of the parties at will. I think, the only reasonable claim allowable on that item of claim is the salary of the said staff for four months too. That is to say, N2,000.00k for 4 months, totalling N8,000,00k. I must emphasise here and it is even trite law, that a plaintiff must always take all reasonable steps to mitigate the loss to him caused by a defendant’s wrong or breach. A plaintiff can not be allowed to claim or recover damages for any loss which he could have avoided but has failed through unreasonable action or inaction to avoid. In the instant case the claims he made, for example, on rentage of shop, salaries for four staff ought to have been mitigated by him but he failed to do so. See Okongwu v. NNPC (supra); Obaike v. BCC Plc. (supra). He can not therefore be allowed to wholly claim them. This issue therefore succeeds in part.

In the result, the appeal succeeds in part. The judgment of the lower court that there is no binding contract between the two parties is hereby set aside. Instead, it is hereby held that there is a binding contract between the two parties. However, the claims of damages succeeds and are allowed but only to the extent stated hereunder on both the special and general damages claimed. That is to say:-

(i) Loss of profit for four months (23/8/93 to 23/12/1993) at N282,240.00 per month totalling N1,128,960.00.

(ii) Rent for warehouse for four months at the rate of N3,000.00 per month i.e. N12,000.00k.

Refund of N30,000.00 deposit earlier paid to the defendant/respondent by the plaintiff/appellant which should be refunded to plaintiff/appellant.

(iii) Salaries of four staff at N500.00 per person per month, amounting to N2,000.00 per month for four months equal to N8,000.00k.

Total one million, one hundred and seventy-eight thousand nine hundred and sixty naira only (N1,178,960.00k).

The judgment of this court is that only the amount totalled above should be paid to the plaintiff/appellant by the defendant/respondent company as special and general damages. The appellant is entitled to costs which I assess; at N10,000.00 to be paid to him by the respondent company.

Other Citations: (2005)LCN/1717(CA)