Zakhem Construction (Nig.) Ltd V Emmanuel Nneji (2006)
LAWGLOBAL HUB Lead Judgment Report
G. A. OGUNTADE, JSC
The appellant was the plaintiff at the Kaduna High Court, where he claimed against the defendant, damages for breach of contract, arising from the sale and hire of gas cylinders to the defendant. The parties filed and exchanged pleadings after which the suit was heard by Umaru Adamu J. In his judgment on 9-2-2000, the trial judge made his final awards in favour of the plaintiff in these terms: PAGE| 2 “1. Defendant shall pay the plaintiff cost of hiring 63 gas cylinders from 1st Dec., 1993 to 28th February, 1993 – the sum of N283,500.00 (Two hundred and eighty three thousand, five hundred Naira). 2. Transportation on 8 occasions to Suleja at N4,000.00 (Four thousand Naira only) per trip = N32,000.00 (Thirty two thousand Naira only). 3. Defendant shall pay cost of hiring at N=50.00 (Fifty Naira) per cylinder per day from 28th February, 1994 to 31st July, 1995. 4. Defendant shall pay cost of hiring at N50.00 (Fifty Naira only) per cylinder per day from 1st August, 1995 to 23/12/99. 5. Defendant shall pay general damages to the plaintiff in the sum of Nl25,000.00 (One hundred and twenty five thousand Naira only). Judgment entered in favour of the plaintiff as above, I wish to further state that the defendant shall be entitled to counter-claim in the sum of N210,000.00 (Two hundred and ten thousand Naira only) in his favour and against the plaintiff being refundable deposit paid to the plaintiff by defendant in respect of the 60 (Sixty) cylinders. The sum of N210,000.00 (Two hundred and ten thousand Naira) shall be paid without interest. Judgment accordingly entered as above. The 63 gas cylinders shall forthwith be returned to the plaintiff by defendant.” The defendant was dissatisfied with the judgment. It brought an appeal against it before the Court of Appeal, Kaduna Division (hereinafter referred to as ‘the court below). On 10-01-2002, the court below, in the majority judgment per Omage and Mohammad JJCA.), allowed the appeal. Plaintiffs claims were dismissed except that the order that the defendant return the 63 gas cylinders was upheld. The minority judgment by Umoren JCA. dismissed the appeal and upheld the judgment of the trial court except the first head of claim for the return of the 63 gas cylinders. The plaintiff was dissatisfied with the majority judgment of the court below and has brought a final appeal before this Court. In the appellant’s brief filed for the plaintiff, the issues for determination in the appeal were identified as these: “3.1. Whether the Justices of the Court of Appeal, Kaduna especially their Lordships, Omage and Muhammad J.JCA correctly evaluated the evidence before the trial court when they held that the initial temporary agreement between the parties tendered and admitted as Exhibit 2, was the only evidence of the transaction between the parties in the contract of supply of gas cylinders, therefore any relief not contained in the said Exhibit 29, cannot be sustained? 3.3. Whether the appellant has suffered any damage known to law entitling him to an award of damages as granted by the trial court especially in view of the fact that the respondent withheld and seized the appellant’s 63 gas cylinders for over six years.” The defendant’s counsel in his respondent’s brief formulated the issues for determination differently thus: “1. Whether from the contract between the parties, the evidence before the court and the finding of the trial court on hire of 63 gas cylinders, the lower court was right in setting aside the award of N6,943,000.00 being rent of 63 gas cylinders at N50.00 per cylinder per day from 1st December 1993 to 23rd December, 1997. 2. Whether from the contract between the parties and the evidence, the lower court was right in setting aside the award of N125,000.00 general damages for breach of contract and N32,000.00 cost of transport awarded in favour of the appellant.” On a first look, one gets the impression that the two sets of issues formulated in the parties’ briefs are different. On a further analysis however, and viewed against the judgment of the court below, it becomes apparent that the parties merely projected into the formulation of their issues their respective standpoints on the case. I shall be guided by the appellant’s issues, he being the aggrieved, on the judgment of the court below. The two issues will be considered together. As a starting point, it is desirable to have a fair understanding of the nature of the dispute out of which this appeal arose. The plaintiff, as he pleaded in his amended statement of claim, carried on the business of the supply of gas in gas cylinders. On 17/9/93, the plaintiff and the defendant entered into a written agreement. The plaintiff was to sell gas to the defendant in cylinders on a continuing basis. The defendant, which was based in Suleja, Niger State, was to pay for the cost of transportation of the gas cylinders from Kaduna, the base of the Plaintiff to Suleja. The plaintiff supplied an initial 60 gas cylinders to the defendant against which the defendant deposited N210,000.00 at N3,500.00 per cylinder. Further supplies were made to the defendant. At the time the suit was brought, plaintiff had a total of 63 gas cylinders with the defendant. It was pleaded that at the time the defendant stopped buying gas from the plaintiff, it did not return the 63 empty gas cylinders. Rather, the defendant used the empty cylinders to buy gas from other gas dealers. The plaintiff further pleaded at between 1/12/93 and 28/2/94, it cost N50.00 per cylinder per day to hire a gas cylinder and this rose to N200.00 and later to N300.00 by 1/8/95. The plaintiff therefore claimed against the defendant as follows: “(a) Use of the 63 gas cylinders for 3 months at N 1,500.00 per cylinder per month 8th November, ‘93 – 8th Feb., ‘94 = N283,500.00 (b) Transport on 8 occasions to Suleja at N4,000.00 per trip = N32,000.00 GENERAL DAMAGES N184,000.00 TOTAL N500,000.00 The Plaintiff claims an order of the Honourable Court compelling the defendant company to deliver the 63 gas cylinders to the plaintiff. The plaintiff further claims the sum of N200.00 per cylinder per day from the defendant as from the 8th day of February, 1994 till the defendant delivers the 63 cylinders to the plaintiff. The Plaintiff claims interest at the rate of 45% P.A compounded as from the 1st November, 1994 till the determination of this suit and further 10% i.e. total of 55% per month until total liquidation of the judgment sum plus interest. Whereof the Plaintiff claims the said interest and order against the defendant for the matter aforesaid.” The defendant in paragraphs 4-10 of its amended statement of defence and counter-claim pleaded thus: “4. The defendant in answer to paragraph 5 of the claim avers that the plaintiff had always been transporting the cylinders to Suleja and would charge transport cost to his bill. 5. In further answer of paragraph 6 of the claim, the defendant avers that the said clause in the agreement does not denote that the defendant could not buy gas from other suppliers only that the plaintiff’s cylinders would not be used to buy gas from other suppliers. 6. In answer to paragraph 7 of the claim, the defendant avers that the plaintiff after being paid a refundable deposit of N3,500.00 per cylinder (totalling N210,000 (two hundred and ten thousand Naira) as per the agreement dated 17-9-93, it received a supply of 60 cylinders from the plaintiff. 7. In further answer to paragraphs 8 & 9 of the claim defendants avers that they too have empty cylinders and that plaintiff had been selling to them by depositing already filled cylinders while taking the same numbers of empty cylinder in replacement. The defendant does not withhold any empty cylinder in replacement. The defendant does not withhold any empty cylinders belonging to the plaintiff. Defendant further avers in answer to paragraph 8a of the claim that it follows the contract agreement strictly to the letter and did not at anytime get excess 3 gas cylinders from the plaintiff and did not at any time give agreement notes to the plaintiff. If any agreement notes were given to the plaintiff (not conceded they might have been forged by the plaintiff in collaboration with some of the defendant’s former employees.) 8. The defendant in answer to paragraphs 10 of the claim avers that they have not used the plaintiff’s cylinders to purchase gas from other dealers. Rather sometimes in 1993, one Mr. Pius Tima a former employee of the defendant who (hereinafter is called the said employee) was in charge of receiving supplies was found to have forged the defendant’s store keeper’s signature allegedly receiving iron flat sheets’ plates) needed for the latter’s project. PAGE| 5 9. After these findings, the buyers on receiving of the stolen goods were arrested together with the said defendant’s employee. The defendant’s employee and the receivers are presently being prosecuted at Chief Magistrate Court, Suleja. 10. As a result of the discovery in foregoing paragraph 8, the defendant with the assistance of policemen at its depot embark on thorough investigations of the activities of the said employee and discovered that he had been involved in forging signatures of his boss allegedly receiving goods that were never supplied. It was also discovered that the plaintiff was one of the suppliers in favour of which forgery had been committed by the said employee. The defendant has asked the plaintiff to produce the copies of the LPOs on which he is putting his claims to enable police investigate on the genuineness of the signatures but plaintiff has so far refused to assist the police.” The plaintiff, at the hearing, called evidence in support of his claim. He tendered as exhibit 29 the agreement, which the parties subscribed to at the commencement of their relationship. The plaintiff also tendered several other documents, which he relied upon as constituting elements of the agreement he had with the defendant. The trial court in its judgment at pp. 176-177 of record of proceedings observed: “This document exh. 11 tends to show that the plaintiff has excess cylinders in possession of the defendant. To buttress plaintiff’s claim on excess cylinders in the custody of the defendant, the plaintiff tendered Exh. 13 which is referred to (sic) excess cylinders to Zakhem Exh. 13 contained various figures of excess Oxygen and Acetylene cylinders 28 and 25 respectively, giving the total to 86 on 20/12/93 stated – Empties will be removed without refurbishment until outstanding balance is returned – 86 They had various receipt of both Oxygen and Acetylene. 02-61 and Acetylene – 34.Therefore, the excess balance will be 3 cylinders. It appears that out of 86 cylinder, 83 were returned, the balance excess will be 3 cylinders. Indeed Exh. 8 dated 30/10/93, Exh. 11 dated 8/11/93 and Exh. 13 dated 20/12/93 pleaded in paragraph 8 and 8a of the plaintiff amended statement of claim dated 10/11/93. Looking at Exh. 11 dated 8/11/93 and Exh. 13 dated 20/12/93, we find written agreement transacted in respect of the supplies of the commodities, empties were not collected till after certain time the empties were released to the plaintiff. These written documents are additional agreement which followed the original agreement contained in Exh. 29. Upon the foregoing, it is without doubt that Exh. 29 and the subsequent documents are binding on the parties to the contract agreement in dispute. Therefore, the defendant cannot deny the binding effect of these documents on him. Having establishing the binding effect of the contract, the plaintiff and the defendant, I have noted the breach of which gave rise to claim before me. However, this breach of that contract is highlighted in exh. 12 dated 10/11/93. The breach noted in paragraph 2 of exh. 12 that defendant is using gas cylinders of the plaintiff to purchase gas from another company. It is further noted that such practice is prohibited and violated their contractual agreement of both parties signed in exhibit 29. PAGE| 6 Further exhibit 24 is evidence of the breach; Exh. 24 letter written by the Plaintiff’s Solicitor demanding the defendant to fulfil his obligation in respect of the contract binding on both plaintiff and defendant.” The court below in its majority judgment was of the view that the trial court was in error to have treated the other documents tendered by the plaintiff apart from exhibit 29 as the agreement between the parties. Exhibit 29, which both parties acknowledged as the agreement between them reads: “Temporary agreement for supplies of sixty (60) cylinders of acetylene and oxygen to Zakhem Construction Company, Abuja. Emaco group of Companies do hereby agree to supply 40 cylinders of oxygen, 20 cylinders of acetylene to Zakhem Construction Company Abuja on the following conditions. (1) Sales Deposit: there shall be a sales deposit of three thousand five hundred Naira per cylinder prior to supplies and which shall be refundable after expiration of the contract. (2) Content price shall be as follows: Oxygen N700.00/ cylinder Acetylene N1,350.00/cylinder. (3) Service charge: N80.00 service charge shall be made/cylinder on every supply. (4) Valve Damage: In case of damage to valve, a charge of N900 shall be made for replacement of one. (5) Loss of cylinder: A charge of N5,000.00 shall be made for replacement of one lost cylinder. (6) Payment for supplies: shall be made through cheques (certified) at the end of every month in the above name only. (7) Method of supplies: supplies shall be made on the receipt of LPO, and trans-portation by self but where Emaco undertakes transportation, surcharge shall be made NOTE: under no circumstances shall you use our cylinders to purchase gas from any other dealer other than from our Company Emaco.” A comparison of the terms of exhibit 29 above with the heads of claim raised by the plaintiff (earlier reproduced in this judgment) shows that the parties had at the commencement of their relationship vide exhibit 29 made provisions in respect of the gas cylinders given to the defendant by the plaintiff. The defendant was made to deposit the sum of N3,500.00 per cylinder and the amount so deposited was made refundable after the expiration of the contract. The defendant deposited N210,000.00 for the 60 gas cylinders which were given to it at the beginning. It was also agreed that if any cylinder got lost, the plaintiff would charge against the defendant the sum of N5,000.00. PAGE| 7 There was no evidence that the parties entered into another contract apart from exhibit 29. The documents which the trial court treated as contracts additional to exhibit 29 were only invoices, letters and receipts exchanged between the parties. Surprisingly, I must say the trial court even regarded a letter, Exhibit 24, written by plaintiff’s counsel to the defendant as a contract between parties. Exhibit 24 reads: “27-1-1994 The Managing Director ZAKHEM Construction Nig. Ltd., Suleja. Sir, RE: YOUR CONRACT WITH EMACO GROUP OF COMPANIES We write as solicitors to Emaco Group of Companies, on whose firm instructions we now write you. Our client has informed us and shown to us the agreement between you by which our client supplies industrial gas to your Company. It is further our information that you are retaining 63 gas cylinders of our client on the agreement that you will not use the cylinders to purchase gas from any other company or individual but only from our client. You may recall you were in breach of this contract sometimes in November, 1993 and this resulted in our letter ENS/EC/N/78/93 of 10/11/93 to you which you ignored. It is our sad information now that not only did you courageously ignore our said letter but you have continued the breach of the terms of the contract between you. This you have done by refusing to buy from our client since our earlier letter and have continued to use 63 cylinders of our clients to purchase gas from other companies. This is sequel to the fact that you have continued in business for the period aforementioned. It is further our sad information that within this period of November, 1993 our client has come to you bringing along filled gas cylinders eight times which you neither accepted nor gave our client his empty cylinders. It is our instruction to demand as follows: 1. That you pay to us for the transport of our clent for the 8 times that our client came to you and you refused to accept gas, at the rate of N4,000.00 per trip, and that is a total of N32,000.00 PAGE| 8 2. For using our client’s cylinders to purchase elsewhere contrary to the contract terms, the 63 cylinders; are now on hire to you at the rate of Nl,500.00 per cylinder per month. So for the period of two months you are in breach, you are to pay to us a total of N189.000.00. This brings our total claim which you are to pay to us now to two hundred and twenty one thousand Naira (N221,000.00). 3. You are to hand over to us our client’s 63 cylinders on or before 3/1/94. your failure to handover the 63 gas cylinders to us as demanded will continue to attract hire-rent as herein calculated. 4. If however you resume normal business/purchases with our client’s cylinders from February, 1994 we charge you hire-rent for only December and January. Please note that we shall not allow you to continue to retain our client’s gas cylinders to be purchasing with them from another company and we shall embark on all available legal process to enforce our claim in the unfortunate event of your non-compliance with this letter. We give you up to 31/1/94 to comply with this letter or face legal battle with us. Thanks. Yours faithfully, (Sgd.) Basil C. Nwosu & Co. (Legal Practitioners) C.C. EMACO GROUP OF COYS., No. 3 Dan-musa Road, Kaduna.” It is trite law that an offer must be accepted in order to crystallise into a contract. See Alexander Brogden & Ors. V. The Directors & Co. of the Metropolitan Railways Company  2 app. Cos 666 at 691 as applied in College of Medicine V. Adegbite  5SC. 149 at 163. It is possible for a contract to emerge from series of correspondence between two persons. But it must be apparent, when the correspondence exchanged are read together that parties have come to an agreement. In Shell B.P. V. Jammal Engineering  4 S.C. 33 at 72, this Court per Coker JSC observed: “The final exercise of judgment must of necessity involve a consideration of all the corres-pondence that is properly put in evidence by both sides — all the correspondence tendered in order to establish the case and all that produced in order to disprove the existence of a contract. PAGE| 9 It is only after such detailed consideration that a tribunal can fairly come to the conclusion as to whether or not the parties actually arrived at an agreement. See Thomas Hussey V. Horne-Payne  4 App. 311. The task of analysing the several letters and attempts to reconcile the one with the other is undoubtedly a very difficult one calling for the most serious exami-nation of each and everyone of several documents until the tribunal is able to say whether a contract is indeed established.” In this case, parties had not been engaged in an exchange of correspondence directed towards the emergence of an agreement between them. Rather, they had been guided in their transactions by the only agreement which both acknowledged as exhibit 29. When exhibit 29 is read, it becomes apparent that there was no contract of hire between the parties. The defendant had deposited N210,000.00 for 60 gas cylinders. The plaintiff testified that the defendant subsequently received 3 more gas cylinders. It was agreed in exhibit 29 that if any of the gas cylinders got lost, the defendant would pay N5,000.00 for it. The defendant also filed a cross-appeal against the judgment of the court below. The grouse of the defendant is that the court below was in error to have upheld the order made by the trial court that the defendant should return 63 gas cylinders in dispute to the plaintiff. I think that there is merit in the complaint of the defendant. The defendant made the case that he did not have plaintiff’s 63 gas cylinders as these had been returned to the plaintiff. The plaintiff however led evidence that the defendant still had his 63 cylinders. The evidence which the trial court accepted was that the defendant failed and or neglected to surrender plaintiff’s 63 gas cylinders. The simple approach to resolve the dispute was to treat the 63 gas cylinders as lost and to make the defendant pay for them at the agreed N5,000.00 per cylinder. Since the plaintiff had previously deposited N210.000.00 for 60 gas cylinders, the right approach was to deduct the N210,000.00 deposited from N5,000.00 multiplied by 63 and to make the defendant pay the balance. The equation then comes to this (N5,000.00 x 63 – N210,000,00). This gives a net sum of N105,000.00 due to the plaintiff. The court below rightly in my view held that exhibit 29 was the only contract between the parties and that their rights fell to be determined in accordance with the terms of the said exhibit 29. It however failed to go a step further to determine how much was due to the plaintiff on the basis of exhibit 29. It upheld the judgment of the trial court that 63 gas cylinders be returned to the plaintiff when the indications were that these were lost. In the final conclusion, this appeal fails. It is dismissed. The cross-appeal succeeds. It is allowed. I set aside the order that the defendant returned 63 gas cylinders to the plaintiff. In lieu of that order, I award one hundred and five thousand Naira only (N105,000.00) in plaintiff’s favour against the defendant being the amount due from the defendant to the plaintiff arising from the defendant’s failure, neglect or refusal to return plaintiff’s 63 gas cylinders. It is fair to conclude that parties bear their own costs. I therefore make no order as to costs.