BETA GLASS PLC. v. EPACO HOLDINGS LIMITED
(2010)LCN/3826(CA)
In The Court of Appeal of Nigeria
On Friday, the 28th day of May, 2010
CA/B/184/2007
RATIO
CONTRACT: ELEMENTS OF A BINDING CONTRACT
It is an established principle of law that for a contact to be binding, there must exist, five important factors, that is, offer, acceptance, consideration, intention to create a legal relationship and the due capacity to enter into the contract. All these determinants must co-exist before a valid contract can exist in law. See the cases of: (1) Okubule v. Oyagbola (1990) 4 NWLR (Pt. 147) p.723 and (2) Omega Bank (Nig.) Plc v. O.B.C. Ltd. (2005) 8 NWLR (Pt. 928) p. 547. In order to create an enforceable contract, the parties must express their intention in a form, which is sufficiently certain for the courts to interprete. See the case of; Orient Bank v. Bilante International Ltd. (1997) 8 NWLR (Pt.515) p.37. It is also important to note that before any contract can come into existence in law, there must be an unmistaken and precise offer and an unconditional acceptance of the terms initially agree upon by the parties thereto. See the cases of:
(1) Odutola v. Papaersack (Nig.) Ltd. (2006) 18 NWLR (Pt.1012) p.470;
(2) Ezenwa v. Ekong (1999) 11 NWLR (Pt. 625) p. 55 and
(3) Sona Breweries Plc. v. Peters (200$ 1 NWLR (Pt. 908) P.478. PER OYEBISI F. OMOLEYE, J.C.A.
EVIDENCE: WHAT IS THE DUTY OF A PERSON SEEKING TO ENFORCE HIS RIGHTS UNDER A CONTRACT
Therefore, parties are bound by the terms of the contract they went into willingly. Hence, a person seeking to enforce his rights under a contract must show that he has performed all those terms which ought to have been performed by him. It follows that a party who fails to perform his own obligation under a binding contract to the detriment of the other party is said to be in breach of the contract. The onus of proof of breach of contract is on the party who asserts breach of the contract. This is in tune with the provisions of Section 135 (1) of the Evidence Act that, whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. When a person is bound to prove the existence of any fact, the burden of proof lies on him. However, just as in all civil cases, the onus of proof is not static, it shifts from side to side, where necessary, and the onus of adducing further evidence is on the person who will fail if such evidence were not adduced. See the case of: Ike v. Ugboaja (1993) 6 NWLR (Pt.301) p. 539. PER OYEBISI F. OMOLEYE, J.C.A.
WORDS AND PHRASES: MEANING OF DAMAGES
Damages mean pecuniary compensation obtainable by a successful party in an action for a wrong which is either of tort or a breach of a contract. PER OYEBISI F. OMOLEYE, J.C.A.
DAMAGES: WHAT IS THE PURPOSE OF AN AWARD OF DAMAGES
The purpose of an award of damages is to compensate the plaintiff for damage, injury or loss suffered. The guiding principle is “restitutio in integrum”, a situation where a court is called upon to assess that a party which has been damnified by the act which is in issue must be put in the position in which he would have been if he had not suffered the damage for which he is being compensated. PER OYEBISI F. OMOLEYE, J.C.A.
JUSTICES
AMINA ADAMU AUGIE Justice of The Court of Appeal of Nigeria
GEORGE OLADEINDE SHOREMI Justice of The Court of Appeal of Nigeria
OYEBISI FOLAYEMI OMOLEYE Justice of The Court of Appeal of Nigeria
Between
BETA GLASS PLC. Appellant(s)
AND
EPACO HOLDINGS LIMITED Respondent(s)
OYEBISI F. OMOLEYE, J.C.A. (The Delivering the Leading Judgment): This is an appeal against the judgment of the High Court of Delta State holden at Warri, delivered by T.C. Makwe J. on 30th April, 2007.
The brief background facts of this matter are that, the parties allegedly entered into an agreement for the procurement of beer mug mould for the manufacture of beer mugs. The Respondent was entitled to twenty-five per cent of the six million mugs that were to be produced and paid that same percentage of the cost of the mould. Initially, the Respondent was also to pay the sum of Nine Naira (N9.00) which was later reviewed to Eighteen Naira (N18.00) per mug. The Appellant allegedly failed to supply the total number of mugs due to the Respondent. Hence, the Respondent instituted an action against the Appellant at the lower Court for breach of contract and claimed the sum of Four Hundred Million Naira (N400,000,000.00) for loss of profit, general damages and loss of goodwill. Pleadings were exchanged by the parties. The Respondent’s Further Amended Statement of Claim and the Appellant’s Amended Statement of Defence are contained in pages 23 to 27 and 93 to 99 of the record of appeal respectively. The case went to trial and several exhibits were tendered in evidence in support of the positions of the parties respectively. At the end of trial the lower Court in its judgment held that there was a contract for the purchase of the special mould for the production of One million five hundred (1,500,000.00) units of beer mugs for the Respondent which was breached by the Appellant and consequently the Respondent is entitled to damages. The sums of Fifty million eight hundred and eighty nine thousand five hundred and sixty Naira (N50,889,560.00) and Ten million (N10,000,000.00) were awarded to the Respondent as special damages, that is, loss of profit and general damages respectively.
The Appellant dissatisfied with the said judgment appealed against it to this Court vide its notice of appeal which was filed on 11th May, 2007. By the order of this court, the said notice of appeal was amended. The amended notice and grounds of appeal contains three grounds of appeal. The three grounds of appeal with their particulars read thus:
GROUND 1
The learned trial Judge misdirected himself in law when he proceeded to award to the defendant the judgment sum of N60,889,560 (Sixty million, eight Hundred and eighty nine thousand , five hundred and sixty Naira) as damages.
PARTICULARS
1. There were no credible and legally admissible evidence before the Court to justify the award of damages of N60,889,560 (Sixty million, eight hundred and eighty nine thousand, five hundred and sixty Naira) to the plaintiff.
2. The judgment sum awarded to the plaintiff was unreasonable as items of special damages were not sufficiently particularized and proved strictly.
3. The award of the judgment sum of N60,889,560 (Sixty million, eight hundred and eighty nine thousand, five hundred and sixty Naira) to the plaintiff on the heads:
1. Loss of profit.
2. General damages.
3. Loss of goodwill.
As per paragraph 44 of the plaintiff’s further amended statement of claim dated 6th September, 2005 amounted to double compensation.
4. The items of loss of profit and loss of goodwill as per paragraph 44 of the plaintiffs further amended statement of claim dated 6th September, 2005 were not specially proved by the plaintiff.
GROUND 2
The learned trial Judge misdirected himself in law when he proceeded to enter judgment in favour of the plaintiff in the sum of N60,889,560 (sixty million eight hundred and eighty nine thousand, five hundred and sixty naira) when plaintiff could not discharge the burden of proof as required by Section 135 of the Evidence Act, Cap 112, Laws of the Federation of Nigeria, 1990.
PARTICULARS
1. Exhibits D & D1 did not relate to the case of the plaintiff.
2. Exhibits D & D1 relate principally to the financing of an L.P.O. (Local Purchase Order) and not the production of beer mugs.
3. Exhibit F was never a reply to Exhibit E by the defendant. Exhibit F speaks for itself, as it was a reply from the defendant to a letter dated and November 1994 from the plaintiff requesting for production of some beer mugs.
4. Plaintiff concealed the request letter from the trial Court.
5. The trial Court ought to invoke the provisions of Section 149(d) of the Evidence Act, Cap 112, Laws of the Federation, 1990 against the plaintiff.
6. Exhibit G spelt out the conditions for the continued production of beer mugs for the plaintiff by the defendant.
7. The burden of proof showing that plaintiff complied with the conditions was not discharged by the plaintiff.
8. Exhibits 1 & M are at variance with the evidence of PW1 (Plaintiff) and paragraph 22, 34 & 35 of plaintiffs further amended statement of claim dated 6th September, 2005.
9. PW1’s (Plaintiff) evidence was grossly at variance with the statement of claim.
GROUND 3
The judgment is against the weight of evidence.
In the brief of argument filed for the Appellant, three issues were formulated for the resolution of this appeal. The three issues read as follows:
1. Whether breach of contract was established by the Respondent?
2. Whether special damages were correctly assessed?
3. Whether general damages were rightly awarded?
On the other part, the Respondent adopted issue one as formulated by the Appellant and formulated one additional issue for determination. The additional issue states thus:
Whether the trial Judge correctly assessed and rightly awarded special end general damages in favour of the Respondent?
On the 3rd of March, 2010 when this appeal was heard by this Court the learned counsel for the Appellant, Mr. George Etomi identified the Appellant’s brief of argument and Reply brief of argument filed on 11th July, 2008 and 20th November, 2009 respectively. He adopted and relied on them in urging upon this court to allow the appeal, set aside the said judgment of the trial court and dismiss the Respondent’s suit filed at the trial court against the Appellant. Although the Respondent’s learned counsel was present in court when this matter came up for hearing and was further adjourned to 3rd March, 2010 for definite hearing, he was absent’ Pursuant to the provisions of Order 17 Rule 9 (4) of the Court of Appeal Rules, 2007, the Respondents brief of argument which was deemed properly fried and served on 9th November ,2009 was taken to have been properly argued.
In my opinion, the issues formulated by the parties are virtually akin. Therefore, I adopt the issues formulated by the Appellant, but I shall take them together along with those of the Respondent’s’.
The Appellant’s learned counsel submitted that the Respondent has failed to establish that there was a breach of contract by the Appellant. For it was the Respondent who was not financially buoyant to finance the business. Along the line, the Respondent could not pay for the goods already produced by the Appellant and as a result, the goods were left in the Appellant’s warehouse thereby resulting to loss to the Appellant. Therefore, as time was not of the essence of the contract, the Appellant could not have rejected offers from other customers when the Respondent had become financially incapacitated.
Regarding the Respondent’s claim for loss of profit, it was argued by the Appellant’s counsel that, for the claim which is a “specie” of special damages to succeed, it must be strictly proved. On this legal principle, he relied on the case of: Gonzee (Nig.) Ltd. v. NERDC (2005) 13 NWLR (Pt.943) p.634 at p. 650 paras. A – B. Accordingly, this presupposes that the Respondent in proving loss of profit must as a matter of strict law lead evidence to show how she arrived at the said loss by tendering for example, the receipts of rent paid for the alleged number of sales outlets, pay slips of the alleged Respondent’s employees, the amounts spent on transportation and maintenance of vehicles during the period in question. For it was not enough as done by the Respondent to plead receipts and pay slips, she ought to have tendered them in evidence- at the trial. Failure to tender the documents pleaded was fatal to the Respondent’s case. Hence, he urged this Court to invoke the provisions of Section 149 (d) of the Evidence Act. He also referred to the cases of:
(1) Nwanji v. Coastal Services (Nig.) Ltd. (2004) 10 M.J.S. p.154 at p.157;
(2) G.F.K. Investment (Nig.) Ltd. v. NITEL Plc (2006) All FWLR (Pt.299) p.1402 at pgs. 1417 – 1418, paras H – B and
(3) Gonzee (Nig.) Ltd. v. NERDC (supra)
It was argued further for the Appellant that, the trial Court was wrong in law to have held that the claim for special damages having been sufficiently particularized, was proof of loss of profit. For the burden of proof in special damages is on the claimant, in this instance, the Respondent. And that burden cannot be displaced by the fact that the Appellant did not cross-examine the Respondent on it or that the Appellant failed to ask for further particulars. The onus is on the Respondent who claimed special damages to supply the particulars of the special damages by credible and admissible evidence. On this position, he relied on the cases of:
(1) Consolidated Breweries Plc. v. Aisowieren (2001) 15 NWLR (Pt.736) p.424 at p.459 paras. H- A and
(2) Sommer v. F.H.A. (1992) 1 NWLR (Pt.219) p.548 at p.560 paras A – E.
According to the Appellant’s counsel, the rules of discovery, inspection and demand for further particulars have no place in the issue at hand and cannot make the burden on the Appellant to be shifted.
On the award of general damages, it was submitted in favour of the Appellant that, such an award is at the discretion of court and such discretion has to be exercised judiciously and judicially based on credible evidence and upon a sound assessment of the evidence. However, where the trial court acted under a mistake of law and disregarded relevant facts in awarding general damages which is ridiculously too low or too high as in the instant matter, an appellate court will interfere with such an award. On this postulation, reliance was placed on the cases of:
l. F.B.N. Plc. v. Excel Plast. Ind. Ltd. (2003) 13 NWLR (Pt. 83n p. 412 at pgs. 455 – 456 Daras.G-A.E-G. and
2. Nzeribe v. Dave Engineering Ltd. (1994) 8 NWLR (Pt.361) p.124.
What is more, courts of law, when considering damages arising from a breach of contract, must not award damages which are speculative or sentimental unless such have been specifically provided for by the express terms of the contract, In the instant case, the Respondent did not adduce credible evidence that she had not fully repaid the bank facility taken by her and that for the period in question, she was unable to meet her financial business responsibilities so as to entitle her to the huge amount claimed by her as general damages.
Furthermore, the Appellant’s learned counsel restated the legal principle that in awarding damages for breach of contract, the court has to consider the remoteness of damages. Thus 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 the execution of the contract. The Respondent also has a legally bounding duty to mitigate her loss, but failed to do so when she continued to maintain so many sales outlets, despite the fact that the Appellant could not produce and supply her with the mugs in dispute for close to a decade. Failure of the trial Court to take this into consideration in awarding damages was an error in law. He rested this argument on the case of:
R.C.C. (Nig.) Ltd. v. R.P.C. Ltd. (200$ All FWLR (Pt. 265) p. 1020 at p. 1041 – 1042. paras. E – F. G – A
It was also the contribution of the Appellant’s learned counsel that the awards of special and general damages by the trial Court amounted to double compensation. This is because the awards of both would be inappropriate unless the party claiming is able to prove that, under special circumstances parties bound themselves that a breach of contract would attract such damages. Hence, a party in an action for damages arising from breach of contract is not ordinarily entitled to double compensation. On this position, he referred to the case of: Kusfa v. United Bawo Construction Co. Ltd. (1994) 4 NWLR (pt.336) para. 1
Contrariwise, the Respondent’s learned counsel submitted that, there was a contract between the parties herein and that the Appellant having failed to perform the terms of same, the Appellant was in breach of the contract. He stated that the contention of learned counsel for the Appellant that the Respondent was not buoyant to finance the business is at variance with the evidence on record and should be discountenanced by this Court. For the Appellant never complained that the Respondent failed to make payments as and when due. That even if time was not the essence of the contract between the parties, eleven years delay by the Appellant to supply the agreed quantity of mugs is definitely inordinate. What is more, the Respondent took a bank loan to finance the business and this fact was to the knowledge of the Appellant. It was argued in favour of the Respondent that, having pleaded and particularized special damages in paragraph 42 of the Further Amended Statement of Claim of the Respondent and having given unchallenged, uncontradicted and uncontroverted evidence on the special damages, the Respondent is deemed to have duly discharged the onus of proof placed on it by law. For this is all that is required of it. Hence, the learned trial Judge, rightly observed in the opinion of the learned counsel for the Respondent that, the legal onus placed on the Respondent had been discharged especially since the Appellant neither asked for further particulars nor cross-examined the Respondent on the particulars of the special damages as pleaded. This postulation was rested on the provisions of Section 149 of the Evidence Act and the cases of:
(1) Nwanii v. Coastal Services Nig. Ltd 10 M.J.S.C. p. 154:
(2) Canna and Dalberto Ltd. v. Deji Akintilo (2003) 14 NSCQR (Pt. 1) p. 469 at p. 474 and
(3) Nzeribe v. Dave Engineering Ltd (1994) 10 SCNJ 161 at p.163
The learned counsel for the Respondent agreed with the trial Court’s assessment and the amount awarded as special damages against the Appellant as being mathematically precise, based on the perceived profit that would have been made by the Respondent had the total number of beer mugs been delivered to her by the Appellant. The learned counsel restated the legal principle that, before the findings of a trial court on the question of damages can be reversed, an appellate court must be convinced that the trial Judge acted upon a wrong principle of law and the amount awarded is extremely high or so very small as to make it unreasonable and an entirely erroneous estimate of the damages to which the plaintiff is entitled. On this legal position, he relied on the cases of:
(l) Nzeribe v. Dave Engineering Ltd supra and
(2) Kusfa v. U.B.C.C. Ltd. (1994) 4 SCNJ (Pt.1) p.1 at p.2.
It was further argued by the Respondent’s learned counsel that, general damages being at large are, subject to the discretion of the trial court and such discretion must be exercised judicially and judiciously. In his opinion, the trial Judge correctly and rightly awarded general damages against the Appellant, having taken into consideration such factors as interest on the loan which the Respondent took to finance the business and the performance of which the Appellant put in abeyance for eleven years.
That the trial Court also considered the embarrassment suffered by the Respondent and the loss of confidence in her by her customers, the inconveniences and expenses incurred in writing and visiting the Appellant when it failed to produce and supply the merchandise to her. That on the whole, the trial Judge properly defined the basis upon which the general damages were awarded especially having regard to awards in similar cases in recent times.
In my humble but firm view, the first poser to be resolved in this appeal is: whether there was a binding contract between the parties herein? It is an established principle of law that for a contact to be binding, there must exist, five important factors, that is, offer, acceptance, consideration, intention to create a legal relationship and the due capacity to enter into the contract. All these determinants must co-exist before a valid contract can exist in law. See the cases of: (1) Okubule v. Oyagbola (1990) 4 NWLR (Pt. 147) p.723 and (2) Omega Bank (Nig.) Plc v. O.B.C. Ltd. (2005) 8 NWLR (Pt. 928) p. 547. In order to create an enforceable contract, the parties must express their intention in a form, which is sufficiently certain for the courts to interprete. See the case of; Orient Bank v. Bilante International Ltd. (1997) 8 NWLR (Pt.515) p.37. It is also important to note that before any contract can come into existence in law, there must be an unmistaken and precise offer and an unconditional acceptance of the terms initially agree upon by the parties thereto. See the cases of:
(1) Odutola v. Papaersack (Nig.) Ltd. (2006) 18 NWLR (Pt.1012) p.470;
(2) Ezenwa v. Ekong (1999) 11 NWLR (Pt. 625) p. 55 and
(3) Sona Breweries Plc. v. Peters (200$ 1 NWLR (Pt. 908) P.478.
Therefore, parties are bound by the terms of the contract they went into willingly. Hence, a person seeking to enforce his rights under a contract must show that he has performed all those terms which ought to have been performed by him. It follows that a party who fails to perform his own obligation under a binding contract to the detriment of the other party is said to be in breach of the contract. The onus of proof of breach of contract is on the party who asserts breach of the contract. This is in tune with the provisions of Section 135 (1) of the Evidence Act that, whoever desires any court to give judgment as to any legal right or liability dependent on the existence of facts which he asserts must prove that those facts exist. When a person is bound to prove the existence of any fact, the burden of proof lies on him. However, just as in all civil cases, the onus of proof is not static, it shifts from side to side, where necessary, and the onus of adducing further evidence is on the person who will fail if such evidence were not adduced. See the case of: Ike v. Ugboaja (1993) 6 NWLR (Pt.301) p. 539.
Putting the above stated legal principles side by side with the facts of the instant matter and having looked carefully into the record of appeal, I am of the opinion and I hold that the relationship between the parties herein comes short of what can be termed a valid contract. This is because there are no succinct or precise or certain or clearly spelt out conditions intended by them to govern their business relationship. Nay, not any, either in writing or orally. The initial understanding would appear to be that, the Appellant was to manufacture the mug mould solely for the Respondent. However, when the Appellant communicated its intention to include other customers to the Respondent, the Respondent did not register any protest, rather, by clear conduct, she agreed to co-own the mould with other customers. This conduct was further extended to the production and sale of the final products, that is, beer mugs. The price of the mug was unilaterally reviewed upward, the mug’s colour was also changed by the Appellant and again the Respondent abided by all of those changes.
It was the Respondent who alleged that there was a contract between her and the Appellant and that the Appellant was in breach of the contract. None of the documents tendered in evidence by the Respondent lent credence to those assertions.
I agree with the learned counsel for the Appellant that exhibits D and D1 have nothing to do with the business relationship between the parties. The Appellant was not a party in the loan agreement between the Respondent and the finance institution. There is no doubt that there was a business relationship between the two parties. The Appellant was to produce one million five hundred thousand mugs, for the Respondent. Of that number two hundred and twenty seven thousand seven hundred and thirty six (227,736) mugs were supplied to the Respondent. The finding of the trial Court that there was a contract for the purchase of a special mould for the production of mugs which was breached by the Appellant was legally improper, not having flowed from the evidence adduced before it. What the trial Court did in the instant matter was the determination for the parties the terms of their relationship instead of interpreting same as can be garnered from their intention and the evidence adduced before it by them. Following the trial Court’s finding that the Appellant was in breach of contract, special and general damages were also awarded in favour of the Respondent. Damages mean pecuniary compensation obtainable by a successful party in an action for a wrong which is either of tort or a breach of a contract. The purpose of an award of damages is to compensate the plaintiff for damage, injury or loss suffered. The guiding principle is “restitutio in integrum”, a situation where a court is called upon to assess that a party which has been damnified by the act which is in issue must be put in the position in which he would have been if he had not suffered the damage for which he is being compensated. In the instant matter, the Appellant is attacking the two heads of damages awarded against it and in favour of the Respondent by the trial Court, that is, loss of profit which is a specie of special damages that must be specially pleaded and strictly proved by credible evidence. And secondly, general damages which the trial Court considered as compensation for embarrassment and inconveniencies suffered by the Respondent as a result of the alleged frustration of the contract by the Appellant.
As earlier on alluded to, it is trite law that special damages must not only be specially pleaded, they must be proved strictly. In the case of, Otaru v. Idris (1999) 4 S.C (Pt.II) p. 87, the Supreme Court maintained its earlier standpoint in the case of: Dumex Nigeria Ltd. v. Patrick Nwaka Oebolo (1972) 1 All NLR p.241 and held that, it is axiomatic that special damages must be strictly proved. Hence, the trial Judge can not make his own individual assessment but must act strictly on the evidence before him which he accepts as establishing the amount to be awarded. In the instant case, the learned trial Judge referred to paragraphs 41 and 42 of the Further Amended Statement of Claim wherein the Respondent claimed loss of profit on the units of the beer mugs which the Appellant allegedly failed to supply and held as follows:
The Defendant merely denied these paragraphs in paragraph 47 of the Amended Statement of Defence. She did not ask for further and better particulars and she did not cross-examine the plaintiff on them to know how much the plaintiff spent on transport, rent, salary and maintenance. I therefore hold that the claim for special damages was sufficiently particularized however inelegant (sic)it might have been done and upon the unchallenged evidence of the plaintiff that he made a profit of N40.00 per mug after deduction of expenses, transport, rent and labour. I hold that the plaintiff has proved the loss of profit of N4.00 per mug on the balance of 1,272,264 mugs refused and/or neglected to have been produced by the Defendant. He is therefore entitled to N40.00 x 1,272,264 = N50,889,560 special damages…
With utmost respect to the learned trial Judge, I must say, his position reproduced above is not the law. As rightly submitted by the learned counsel for the Appellant, it is not sufficient to particularize the claim of special damages. Evidence must as of necessity be led to prove the particulars of the claim. The onus of this proof rests squarely on the plaintiff, it will not shift to the defendant, it has to be strictly discharged by the plaintiff. This is the reason it is called “special”. From the printed record, all that the Respondent did was to merely particularize the claim in her pleadings, no evidence of whatever qualification was led to prove and establish same. It is the law that reposes this onus on the plaintiff and the discharge of the onus is squarely positioned on the plaintiff. The defendant can not help the plaintiff out. The trial court can not also perceive or infer the evidence from the pleadings of the plaintiff. Therefore, it is not in the place of the defendant, in the instant case the Appellant, to request for further particulars from the Respondent in establishing the claim of the Respondent in special damages. Failure to strictly prove the existence of the particulars of the special claim leads to the fatality of same.
The matter does not end there. There is yet another fatal flaw in the Respondent’s claim of special damages. The Supreme Court has confirmed the power of the trial court to award damages upon a judicious estimation from the prevailing circumstances once a breach of contract has been established. Therefore, the terms “general” and “special damages” are normally inappropriate in the categorization of damages in cases where breach of contract has been established. Therefore, apart from damages naturally resulting from the breach, no other form of general damages can be awarded. To put it in different words, the trial court can only award damages arising naturally from a breach. In the case of: Johnson Wax (Nig.) Ltd. v. Sanni (2010) 3 NWLR (Pt.1181) p.235, this court per Dongban-Mensem, JCA. At pgs, 250-251, paras. F -H and A-B adopted the Supreme Court’s decision in the case ofi Maiden Electronics Works Ltd. v. A. – G. of Federation (1974) 1 SC p. 53 at pgs. 97 – 98. paras. l0 – 25 wherein the courts were enjoined in the following words to overlook the use of the terms, “special” and “general damages”, viz:
The plaintiffs/respondents claimed the sum of 10,000 pounds as general damages for this breach. The learned trial Judge awarded them 400 pounds. We have had cause to comment before on the confusion that can arise by the use of the term “special” and damages in cases of breach of contract (See Khawam v. Charai & Co. (1965) 1 All NLR 182; and Akinfosile v. Mobil Oil Nig. Ltd. SC. 724/1966 delivered on 28th November, (1969). The rule governing the award of damages ….. in Hadley v. Baxendale (1854) 9 Exch.341 … is where two parties have made a contract which one of them has broken, the damages which of contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either as arising naturally i.e. accordingly to the usual cause of things, from such breach of contract itself, or such as may be reasonably supposed to have been in the contemplation of the parties, at the time they made the contract, as the probable result of the breach of it.
This is unlike an award in general damages, where if the issue of liability is established, a trial Judge is entitled to make his own assessment of the quantum of such general damages….. (The underlined is for emphasis)
From the above stated standpoint of the Supreme Court’ where it is established that there is a valid contract between parties which is breached by one of them, claims of special or general damages will not avail the party who has been damnified. Therefore, assuming without conceding that the learned trial Judge was right in holding that there was an enforceable contract between the parties herein which in his estimation was breached by the Appellant, the awards of special and general damages made in favour of the Respondent were in law wrongly made’
I am not unmindful of the fact that, it is a general principle of law that the award of damages is at the discretion of the trial court’ and an appellate court will ordinarily not interfere with an award of damages made by a trial court solely because the appellate court is inclined to award a different amount. Therefore, in order to justify reversing the decision of a trial court on the question of the amount of damages awarded by it, the appellate court must as of a necessity be convinced that:
(a) the trial court acted upon some wrong principle of law or under a mistake of law or
(b) the award is arbitrary or perverse or
(c) there has been an element of wrong exercise of discretion in the award or
(d) injustice would result if the appeal court does not interfere or
(e) the amount awarded by the trial court is either ridiculously high or ridiculously low that it must have turned out to be an erroneous estimate of the damages.
See the cases of:
(1) Zikrs Press Ltd. v. Ikoku (1951) 13 WACA p. 188:
(2) Bala v. Bankole (1980 3 NWLR (Pt.27) p. 141;
(3) Tsokwa Motors (Nig.) Ltd. v. Awoniyi (1999) 1 NWLR (Pt.586) p.199;
(4) Onwu v. Nka (1996) 7 NWLR (PT.458) P.1
(5) S.P.D.C. (Nis.) Ltd. v. Tiebo VIII (1996) 4 NWLR (Pt.445) P.657;
(6) Allied Bank v. Akubueze (1997) 6 NWLR (Pt.509) P.374 and
(7) A.S.E.S.A. v. Ekwenem (2009) 13 NWLR (Pt.1158) p.410.
In the premises of the instant case, I am convinced that the learned trial Judge acted under a mistake of law in finding that the Respondent was entitled to loss of profit and the award of damages in that regard was perverse, must be tampered with and it is hereby reversed accordingly.
Regarding the award made by the learned trial Judge in general damages, it is trite law that, where the issue of liability is established, a trial Judge is entitled to make his own assessment of the quantum of such general damages. Again, such general damages will only be altered or varied if they were shown to be either so manifestly too high or extremely too low or they were an entirely erroneous estimate of the damages to which the plaintiff is entitled. See the cases of,
(1) Idohosa v. Oronsaye (1959) 4 FSC p.166;
(2) Ijebu Ode Local Government v. Balogun & Co. Ltd. (1991) 1 NWLR (Pt.166) p.136 at p.158 paras. C – G and
(3) Johnson Wax (Nig.) Ltd. v. Sanni (2010) 3 NWLR (pt.1181) p.235 at p.251 paras B – D.
In the case of Trenco (Nig.) Ltd. v. A.C.B. Ltd. & Anor. (1978) NSCC p.220. the plaintiff company claimed variously as follows:
The plaintiff seeks as against both defendants jointly and severally an order of declaration that the total payments of Pounds 2,710-3s-2d (sic) by the 2nd defendant Bank to the plaintiff plus bank charges and interest thereon were payment made on behalf of the 1st defendant to the plaintiff and not loan or advances made to plaintiff as customer of the said Bank and the said sums are therefore not recoverable from the plaintiff.
Pursuant to a building contract between the plaintiff and the 1st defendant, the 2nd defendant paid the plaintiff a total sum of E12,710-3s-2d (sic) from the funds of the 1st defendant deposited with the 2nd defendant.
The 1st defendant has now committed breach of the said contract, 2nd defendant now threatens to treat the said sums as loan made to the plaintiff, whereas the payments were made to plaintiff on behalf of the 2nd defendant and on its account. Alternatively the plaintiff claims against the 1st defendant the sum of Pound 12,710-3s-2d, (sic) plus interest payable thereon, being general and special damages for breach of the said contract.
Lastly the plaintiff further claims against the 1st defendant the sum of 10,000 (Ten thousand pounds) sterling, being the estimated profit from the said contract. The Supreme Court founded concerning the above reproduced claims that, although in law there was no proof of any formal contract properly entered into between the plaintiff company and the 2nd defendant company and binding on the 1st defendant company, yet on the facts and circumstances of the case, the 1st defendant company cannot, in conscience be heard to deny the instructions to construct the hotel given by its chairman to the plaintiff company in the letter or to refuse to bear the financial burdens of the monies advanced by the 2nd defendant company to the plaintiff on the a:rangement. Therefore, the apex Court held that a declaration must be made accordingly. And that, for it to allow the 1″ defendant in all the circumstances to escape liability for the said monies advanced to the plaintiff company would amount to yielding to what amounts to constructive fraud. The apex Court also held that it could not allow the plaintiff company to suffer pecuniary injury against the dictates of conscience. It went further to hold that since no formal contract had been proved as existing between the plaintiff and the 1st defendant, the claim of the plaintiff for “estimated profits” must fail.
I have carefully perused the record of proceedings, examined the oral and documentary evidence adduced by the parties, I hold that there was no formal contract between the parties herein to procure the said beer mug mould and to supply the said quantify or units of beer mugs. However, based on the business relationship between the parties, there is no doubt that the Respondent had been damnified and thereby suffered pecuniary losses for which she must be compensated by the Appellant. Although the Appellant was not party to the facility taken by the Respondent, as can be gleaned from exhibits D and D1, it was aware that the Respondent took the facility towards the business deal between them. In fact, there was an implied admission by the Appellant that it defaulted on some occasions to supply some units of mugs on demand, thereby putting the Respondent in dire and distressing situations. This can be gleaned from the various correspondence between the parties which were tendered in evidence at trial.
In the light of all that I stated above, this appeal succeeds and is allowed in part. Having held that there was no formal contract between the parties, the Respondent is not entitled to loss of profit. Therefore, I hold that the award of the sum of Fifty Million Eight Hundred and Eighty Nine Thousand Five Hundred and Sixty Naira (N50,889,560.00=), in special damages made in favour of the Respondent by the trial Court was made in error and I hereby set same aside.
I have also stated above that the Respondent suffered inconveniences and incurred expenses in the course of her business relationship with the Appellant. These are pecuniary losses for which she is entitled to be compensated. It is my view and I hold that the trial Court had properly assessed the said losses at the sum of Ten Million Naira (N10,000,000.00), in general damages. I hereby affirm the award of the said sum.
I make no order as to costs.
AMINA A. AUGIE, J.C.A.: I have read before now the lead Judgment just delivered by my learned brother, Omoleye, JCA, and I agree with his reasoning and conclusion.
He has dealt extensively with all the issues canvassed in this appeal, and I will only add a few words on the issue of special damages. The law requires anyone asking for special damages to prove strictly that he did suffer such special damages as he claimed – see Oshinjinrin & ors v. Eliis & ors (1970) 1 ANLR 158, where Coker JSC added that –
“This, however, does not mean that the law requires a minimum evidence measure of or that the law lays down a special category of evidence required to establish his entitlement to special damages. What is required is that the person claiming should established his entitlement to that type of damages by credible evidence of such a character as would suggest that he indeed is entitled to an award under that head, otherwise the general law of evidence as to proof by preponderance or weight usual in civil cases operates. A Court trying such a case should give adequate consideration to the evidence offered in support of a claim for special damages and if the accepted evidence possesses such a probative value as preponderate the case in favour of the person claiming, then an award would certainly be justified” (Italics mine).
In other words, the claimant must establish his entitlement to special damages by credible evidence of such a character as would suggest that he indeed is entitled to such an award. In this case, the Respondent, who was the Plaintiff at the lower Court, merely particularized the claim for special damages, and provided no evidence at all to back it up. Obviously, that head of claim must fail, and the award thereon set aside.
It is for this and the other reasons stated in the lead Judgment that I also allow the appeal in part. I also abide by the consequential orders in the lead Judgment, including the order as to no costs.
GEORGE OLADEINDE SHOREMI, J.C.A.: I had the privilege of reading the draft of the judgment delivered by my learned brother Omoleye JCA. I agree with the reasoning and conclusion reached in the judgment. All the issues axe well considered. I also affirm the award of the said sum by the trial court.
I order no cost.
Appearances
George Etomi with him Mrs. Pamela Roland-OragboFor Appellant
AND
For Respondent
