CHEVRON NIGERIA LIMITED V. TITAN ENERGY LIMITED
(2013)LCN/5898(CA)
In The Court of Appeal of Nigeria
On Friday, the 8th day of February, 2013
CA/PH/101/2012
RATIO
“Damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for wrong. See Frank Gahua, the Law of Damages 1 (1936); Blacks Law Diction 9th Ed. Penalty is a sum of money extracted as punishment for a civil wrong, as distinguished from compensation for the injured party’s loss. It is an extra charge against a party who violates the terms or provisions of a contract. See Blacks Law dictionary, 9th Ed. Penalty is therefore a sum which a party undertakes to pay or forfeit in the event of a breach of contract. Penalty is fixed, not as a pre-estimate of probable damages, hut as a punishment whose threat is aimed at preventing the breach. See Charles T. McCormick, Handbook on the Law of damages page 146 at 699 (1935). Consequential damages refer to losses that do not flow directly and immediately from an injurious act but that result indirectly from the act. See Blacks Law dictionary, 9th Ed. From the meanings of the terms examined above, it will be correct to say that damages and penalties are not the same.” Per ONYEMENAM, J.C.A.
“Let me reiterate that in breach of contract, assessment of damages is based on the loss sustained by the injured party which loss was either in the contemplation of the parties or is an unavoidable consequence of the breach. See Ijebu-Ode Local Govt. V. Adedeji Balogun & Co (1991) 1 NWLR (Pt.166) 138, General damages are not recoverable in an action for breach of contract. What can be deemed as special damages in a claim for breach of contract are speculative damages otherwise known as remote damages; or punitive damages which though generally not recoverable but is recoverable as special damages if pleaded and proved. Damages as recoverable in an action for breach of contract is in law in its own family. The principles of law governing its award therefore stand distinct. I have read the authorities cited by the learned senior counsel, they all relate to award of general damages and special damages, non is on award of damages in breach of contract. The cases are therefore not relevant to the instant appeal.” Per ONYEMENAM, J.C.A.
“While damages in a breach of contract is to restore the injured party to a position he would have been had the contract been performed, a penalty is meant to punish the defaulting party for breach. Penalty being distinct from damages, the award of penalty where necessary does not in any way stop the court from awarding damages that naturally flow from the breach. A penalty clause in my view is an extra-measure to ensure a party to a contract is deterred from breaking the terms of contract at will. The presence of penalty clause in a contract is not a bar to the award of damages.” Per ONYEMENAM, J.C.A.
JUSTICES:
MAHAMMED LADAN TSAMIYA Justice of The Court of Appeal of Nigeria
ALI ABUBAKAR BABANDI GUMEL Justice of The Court of Appeal of Nigeria
UCHECHUKWU ONYEMENAM Justice of The Court of Appeal of Nigeria
Between
CHEVRON NIGERIA LIMITED – Appellant(s)
AND
TITAN ENERGY LIMITED – Respondent(s)
UCHECHUKWU ONYEMENAM, J.C.A. (Delivering the Leading Judgment): This is an appeal against the Judgment of the Rivers State High Court holden at Port Harcourt before Honourable Justice B. A. Georgewill delivered on 28th July, 2008 in Suit No. PHC/1843/2006.
By writ of summons filed on 21st day of December, 2006 and its Amended Statement of Claim dated 28th April, 2008 the Respondent as Claimant claimed the following reliefs against the Appellant as Defendant,
“(i) A declaration that the Claimant is entitled to be paid for work authorizations duly completed under Contract No. FAC-2005-40021790 made between the claimant and SNCLAVALIN GDS Incorporated of USA on the one part and the Defendant on the other part.
(ii) A declaration that the failure and/or refusal by the Defendant to pay for the completed work under the contract after taking benefit thereunder is a breach of the contract between the claimant and the Defendant.
(iii) An order directing the Defendant to pay to the Claimant the sum of USD 800,670.86 (Eight Thousand, Six Hundred and Seventy Dollars, Eighty-Six Cents) and also the sum of N48,407,436,56 (Forty-Eighty Million, Four Hundred and Seven Thousand, Four Hundred and Thirty-Six Naira, Fifty- Six Kobo) being and representing work done by the Claimant under Contract No. FAC-2005-40021790.
(iv) N7,000,000,000.00 (Seven billion Naira) being and representing accumulated interest charges with effect from November, 2004 till date.
(v) N500,000.000 (Five Hundred Million Naira) damages for breach of contract.
(vi) N500,000,000 (Five Hundred Million Naira) general damages
(vii)10% on the judgment sum until same is fully liquidated.
A summary of the Respondent’s case as contained in its Amended Statement of Claim and the evidence given by PW1 is as follows:
The Appellant on or about November 2004, entered into contract No. FAC-2005-40021790 for Engineering and Project Management Services with the Respondent and One SNC-LAVALIN GDS Incorporated of USA. The Respondent executed and completed several specific work Orders under the contract and the total monetary value for the work done under the contract are USD800,670.86 (Eight Hundred Thousand, Six Hundred and Seventy Dollars and Eighty Six Cents) and N48,407,436.56 (Forty-Eighty Million, Four Hundred and Seven Thousand, Four Hundred and Thirty-Six Naira, Fifty-Six Kobo).
The Respondent claimed that it sourced and obtained loans from its sister companies at 10% interest per month to enable it execute the contract with the hope that the Appellant will pay the Respondent within 75 days of submission of invoices as contractually agreed between the parties. The Appellant terminated the contract but did not pay the Respondent for work done under the contract and that failure of the Appellant to pay the Respondent within 75 days after the submission of invoices was a clear breach of the contract between the parties.
The Respondent claimed that because of the failure of the Appellant to pay the invoices it suffered serious losses, as it affected its operations and it was unable to pay its workers and the loans taken accrued enormous interest charges. The Respondent therefore claimed for declaratory reliefs, special and general damages for breach of contract.
On her own, the Appellant’s case is that: In November, 2004, the Appellant entered into contract No. FAC-2005-40021790 (Exhibit A) for engineering and project management services with the Respondent and one SNC-LAVALIN GDS, INC. Based on the Terms of the contract, all sums due the Respondent were being paid into the Respondent’s account with Standard Chartered Bank.
Sometime in March 2006, the Respondent advised the Appellant of its new banking details and requested that payments due to it from the Contract should be paid into its account with the Nigeria International Bank (NIB).
Shortly thereafter, the Appellant was served with Writ of Summons/ Statement of Claim, Order of Interim Injunction and Motion on Notice for interlocutory injunction to restrain the Appellant herein (sued as 4th Defendant) from making any further payment to the Respondent and from dealing with the Directors of the Respondent in Suit No. FHC/CS/132/2006.
In the said suit, one Rudi Meyenburg who claimed to be a Director and shareholder of the Respondent sued amongst others the Respondent herein, the Appellant herein and Nigeria International Bank. As a result of the proceedings in Suit No. FHC/CS/132/2006, the Appellant stopped making payments to the Respondent.
The Appellant being uncertain as to which Directors were in charge of the Respondent and in order to preserve the subject matter of the Interlocutory Injunction stopped making any further payments to the Respondent in respect of the Contract and this decision as well as the reasons for it were communicated in writing to the Respondent.
Owing to the state of affairs of the Respondent, it became inconvenient for the Appellant to continue with the Contract and the Appellant was therefore constrained to terminate the Contact on grounds of Convenience as provided for in Exhibit A.
As at the time the contract was terminated, the Respondent had executed some work authorizations and submitted invoices for which it was yet to receive payment, The Appellant however invested the monies due to the Respondent pending the resolution of the issues before the Federal High Court. Notwithstanding the pendency of the suit at the Federal High Court, the Respondent sued the Appellant for declaratory reliefs, sums for work done, damages for breach of contract, accumulated interest charges, etc, See pages 240 – 241 of the Record.
The learned trial Judge in a considered judgment granted the declaratory reliefs in favour of the Respondent and also directed the Appellant to pay forthwith the sum of N37,378,687.14 and USD 538, 149.40 being and representing payment for work done, N160,000,000.00 being the loans obtained by the Respondent for the execution of the contract, N26,000,000.00 as general damages for breach of contract and 10% interest on the judgment sums until debt is liquidated together with a cost of N30,000.00.
The Appellant being dissatisfied with the Judgment, filed this Appeal to set aside the judgment of the trial Court as it relates to the N160,000,000.00 being the loans obtained by the Respondent for the execution of the contract, N26,000,000.00 as general damages for breach of contract and 10% interest on the above sums until debt is liquidated together with a cost assessed at the sum of N30,000.00.
Parties duly filed and exchanged their briefs. Appeal was heard on 15th November, 2012. Mrs. M.A. Essien, SAN sought and obtained leave of the Court for Mr. A. E. Ejelam to argue the appeal.
Mr. Ejelam identified, adopted and relied on the Appellant’s brief settled by Mrs. M. A. Essien, SAN; Mr. Sola Laniyan and Mr. A. Enyindah as well as her reply brief settled by Mr. Sola Laniyan.
The Appellant’s brief and reply brief were filed on 10th May, 2012 and 9th October, 2012 respectively. In their brief, the Appellant submitted that from the grounds of appeal, the 4 issues for determination are as follows:
“1. Whether the award of special damages in the sum of N160,000,000.00 for breach of contract made by the learned trial Judge was correct in law.
2. Whether the award of general damages in the sum of N26,000,000.00 for breach of contract by the learned trial Judge was legally justifiable in the circumstance of the case before it
3. Whether from pleadings filed by the Appellant and the Respondent at the lower court, the trial Judge was right when His Lordship held that the Appellant did not specifically deny the Respondent’s averments in paragraphs 4, 5, 6 and 7 of the Amended Statement of Claims?
4. Whether the learned trial Judge was right in holding that the Appellant did not join issues with the Respondent on the loans collected and the interest claimed in the Amended Statement of Defence and thus the evidence of DW1 in its further written statement of oath and the submission of Appellant’s counsel that the loans obtained by the Respondent were not part of the understanding between the parties goes no issue?
In reply, the Respondent’s brief prepared by Mr. I. Blue-Jack was identified, adopted and relied on as the argument of the Respondent in the appeal. The brief filed on 1st June, 2012 adopted issues as formulated by the Appellant as the issues for the determination of the appeal.
ISSUE 1
The Appellant submitted with due respect to the learned trial Judge that the award of N160,000,000.00 as special damages for breach of contract was not justified having regard to the state of the law relating to the award of damages for breach of contract.
She contended that the measure of damages for breach of contract is based on the common law rule in Hadley v. Baxendale (1854) 9 Exch …341. This rule was submitted to have been followed and applied in our Courts. See Nigerian Produce Marketing Board v. Adewunmi (1972) All NLR (Pt. 2) 433 at 438; Okongwu v. NNPC (1989) 4 NWLR (Pt.115) 296 at 307.
Referring to Article 6.2.5 of Exhibit A, the learned counsel for the Appellant submitted that with the liability clause embedded in Exhibit A, the trial Judge was not permitted to assess damages outside the express terms of the Contract. See Nneji v. Zakhem Con. (Nigeria) Ltd (2006) 12 NWLR (pt. 994) 297 at 319-320.
Moreover, the Appellant argued that the loan pursuant to which the special damages of N160,000,000.00 was awarded was allegedly collected on 3rd January, 2005 as evidenced in Exhibit G before the parties entered into the contract in Exhibit A on 1st March, 2005. See pages 242, 57-74 of the Record. He submitted that it was not within the contemplation of the parties at the time the contract was signed that the Respondent would collect any loan to execute the contact.
It was also their argument that in paragraph 29 of the Respondent’s Amended Statement of Claim at pages 237-241 of the Record, the Respondent did not make any claim against the Appellant for the payment of the sum N160,000,000,00 being the loan allegedly taken or for any claim as special damages.
Learned counsel submitted that since there was no claim for special damages, the learned trial Judge was wrong in awarding the sum of N160,000,000.00 as special damages – as the court does not grant relief not sought by a party. See Unokan Enterprises Ltd v. Omuvwie (2005) 1 NWLR (Pt. 907) 293 at 312. See Neka B.B.B. Manufacturing Co. Ltd v. African Continental Bank Ltd (2004) 2 NWLR (Pt. 858) 521.
The Appellant urged the Court to resolve issue 1 in their favour and to hold that the award of N160,000,000.00 as special damages by the learned trial Judge was wrong in law. In reply the Respondent submitted that the Appellant’s arguments on issue 1 is completely misconceived in law as the Appellant completely ignored and or failed to properly appreciate the findings of the learned trial Judge on this issue. Learned counsel referred to the learned trial Judge’s findings on this issue and submitted that the Court of Appeal does not interfere with the findings of fact made by the trial court unless such findings are shown to occasion miscarriage of Justice or is perverse. See Ogbu v. Wokoma (2005) 12 MJSC 96 at 121.
Learned counsel further submitted that once breach of contract is established, damages will flow because damages for breach of contract is restitution in integrum. See Universal Vulcanizing (Nig) Ltd v. I.U.T.T.C. (1992) 9 NWLR (Pt.266) 388; Udeagu v. Benue Cement Co. Plc. (2006) 2 NWLR (Pt. 965) 600 at 619.
On the measure of damages, his submission is in line with that of the Appellant while he referred to: Eagle Super Pack (Nig) Ltd v. A.C.B. Plc (2006) 19 NWLR (Pt. 1013) 20 at 49. The Respondent submitted further that the learned trial Judge has the discretionary power while assessing damages for breach of contract to award an amount though not specifically claimed but which inevitably flow or result from the breach of the contract. He argued that the Respondent could not repay the loan of N160,000,000,00 because as was held by the lower court the Appellant was in breach of Exhibit A. Relying on Order 45 Rule 14 of the High Court of Rivers State 2006, the learned counsel submitted that the lower court was right in awarding the sum of N160,000,000.00 as special damages even though the amount was not asked for by the Respondent in the interest of substantial Justice.
The Respondent’s counsel referred to the submissions of the Appellant’s counsel at page 8 paragraphs 3.141 3.15 and 3.16 of the Appellant’s brief to submit that Exhibit A did not preclude expressly the taking of loans by the Respondent.
The learned counsel urged the court to resolve issue 1 in favour of the Respondent.
When there is a breach of contract, the damages recoverable are the natural and probable consequences or losses reasonably foreseeable by the parties and foreseen by them at the time of the contract as inevitably arising if any of them breached the contract. Exceptional and unusual losses are recoverable from the party in breach, if due to special circumstances, actually or constructively known to him at the time of making the contract he contemplated that its breach would cause losses outside the usual course of things. See Hadley v. Baxendale (1854) 9 Exch. 341; Okongwu v. NNPC (1989) 4 NWLR (Pt. 115) 296 at 307. In essence, a contract being an agreement, knowledge actual or constructive is imputed to the parties. The issue is not whether the Defendant foresaw the damage resulting from the breach. Rather, it is, whether the possibility of its occurrence should have been within the contemplation of both parties at the time they entered into the contract. For instance, damages arising from a breach in paying money due to a Plaintiff at the time it was due is the interest on the amount due. The presumption is that such interest will restore to the Plaintiff whatever loss flowing to him for the failure to pay the money when due. See S. B. N. Plc v. Opanubi (2004) 15 NWLR (Pt. 896) 437.
The rule is that in an action for breach of contract, the terms “special” and “general” damages are inept. Accordingly, there is no distinction between special and general damages in law, relating to breach of contract. See Chanrai v. Khawan (1965) 1 All N.L.R. 182; Shell B. P. v. Jammal Eng. Ltd (1974) 1 All N.L.R. (Pt. 1) 542; Eagle Super Pack (Nig) Ltd v. ACB Plc. (2006) 19 NWLR (Pt. 1013).
I shall also note that the principles of damages in tort are different from those guiding the award of damages on contract.
The object of contract damages is to put the Plaintiff in the position he would have been in, if the contract had been satisfactorily performed. See Hadley v. Baxendale (Supra); Agbanelo v. Union Bank of Nigeria Ltd (2000) 4 SC (pt. 1) 233 at 245.
The learned trial Judge at page 316 lines 21 – 24 held thus: “I hold therefore that the Defendant is liable in special damages to the tune of N160,000,000,00 to the Claimant for the breach of its contract which had led to the Claimant inability to repay the loan in Exhibit G obtained for the purposes of executing the contract in Exhibit A”.
In entering judgment for the Respondent, the learned trial Judge held: “the Defendant shall pay to the Claimant forthwith the sum of N160, 000,000.00 only being the loan obtained by the Claimant in furtherance of the execution of the jobs under the contract between the parties on record which had remained unpaid by reason of the withholding of the money due to the Claimant under the contract by the Defendant since 22/5/2006”.
I had noted the position of the law, that in breach of contract, damages normally recoverable are based on the normal and presumed consequences of the breach complained of and as such the distinction in the terms ‘general’ and ‘special’ damages are usually nonexistent. In that sense therefore the use of the word special damages by the learned trial Judge in his holding at page 316 of the record was wrongly used. In any case, the issue that requires resolution is whether the loan of N160,000,000,00 is a presumed consequence of any breach of Exhibit A by the Appellant.
The learned counsel for the Appellant had argued that the loan of N160,000,000,00 allegedly collected by the Respondent for the execution of the contract was too remote and it could not have been within the contemplation of the parties that the Respondent would take loan to execute the work orders under the contract, It cannot also be said that the Appellant anticipated a situation where it would have to pay for the loan of N160,000,000,00 allegedly taken by the Respondent when specific terms have been provided in the contract for failure to pay within the stipulated time of 75 days after submission of undisputed invoices.
The Appellant further submitted that there is nothing in Exhibit A showing any intention of the parties that the Respondent should obtain loan prior to and/or after the award of the contract for the execution of the contract in Exhibit A.
Rather, the Respondent represented itself as possessing the financial capacity to execute the contract by giving warranty to that effect. Article 4.7.1 of Exhibit A was referred to. The Appellant yet submitted, that the Respondent having so held itself out to the Appellant as having the necessary financial capacity to execute the contract, the Respondent cannot be entitled to damages at all as it was not within the contemplation of the parties that the Respondent would collect loan on 3rd day of January, 2005 for the execution of the contract which came into existence effectively on 1st day of March, 2005. See G. Chitex Industries Limited v. Oceanic Bank International Nigeria Limited (2005) 14 NWLR (Pt. 945) 392 at 410 Paras. B-D.
It is correct as argued by the Appellant that parties are bound by the terms and conditions of the agreement they have freely entered into. See Ladipo v. Lajide (1973) 5 S.C. 207. In this case, the Appellant and Respondent are bound by Exhibit A. I have perused Exhibit A and Article 4.7.1 in particular which provides:
“Contractor has and will utilize for the work the technical competence, financial capacity, management skills, competent and qualified personnel and equipment necessary to carry out its duties and responsibilities under this Contract”.
I do not observe any provision in Exhibit A expressly precluding the taking of loan by the Respondent. Relying on Article 4.7.1 of Exhibit A, the Appellant argued that having held itself out as having the financial capacity to execute the contract, the Respondent cannot be entitled to the damages for the loan she obtained as that was not within the contemplation of the parties.
With due respect, the learned senior counsel misconstrued Article 4.7.1 of Exhibit A. That Article which referred to technical competence, management skills, competent and qualified personnel etc does not by any means foreclose the Respondent from hiring competent technicians or personnel outside her staff, in the execution of the contract. What is important is that the high standard required of the job shall be achieved. Same applies to finance, the Respondent’s obligation as far as it relates to financial capacity was to ensure lack of fund does not either hinder the execution of the contract or result to poor execution of the contract. I do not therefore agree with the submissions of the learned senior counsel for the Appellant that the Respondent by holding out herself as having the financial capacity means she is financially sufficient and autonomous. Rather I hold that it was the understanding of the parties under the contract that the Respondent was capable of raising the finance with which to execute the contract punctually and effectively to the satisfaction and standard of the Appellant. Accordingly, sourcing for and obtaining loan for prompt and quality execution of the contract was in tune with the spirit of Article 4.1.7 of Exhibit A.
I am also of the view that it was an evidence or a show of the Respondent’s financial capacity that accounts for the swift collection of the loan of N160,000,000.00 while the contract negotiation was being tied up. This I say because Exhibit A (the agreement) is dated on the cover page November, 2004. For prompt execution of contract, the finance required for its execution or reasonable part of it must be available before the coming into effect of the contract. From the record particularly Exhibit G the N160,000,000.00 was collected on 3/1/2005 while the Respondent executed Exhibit A (the agreement) on 24/2/05. I agree with the finding of the lower court that the time the loan of N160,000,000.00 was obtained was reasonably linked with the contract-Exhibit A. It is not correct to say, that the Respondent acted in haste and recklessness in their business decision , by collecting a loan of N160,000,000.00 on the date she did, I therefore uphold the finding of the lower court that the Respondent obtained Exhibit G in connection or for the purposes of executing the contact.
Having so stated, I hold as sound the lower court’s finding of fact that “the Claimant was not given any mobilization fees to commence the execution of the jobs in Exhibit A by the Defendant and that in the circumstances and in the context of the standard and requirements of the execution of the contract and the obligations of the Claimant under the various terms of the contract particularly Article 4.6-4.62 and 4.71 and 4.72 of Exhibit A, it was reasonably expected that the Claimant would raise the needed financial resources to execute the contract of about USD16 Million which translated to about N153 Million. This much can be reasonable inferred from Article 6.22 in Exhibit A which clearly envisages that there may be need in appropriate circumstances for the Claimant who was not mobilized to seek a reduction in the 75 days payment period to 45 days payment period to meet its financial obligations”. See page 315 lines 12-20 of the record.
In conclusion therefore I hold that the Respondent was reasonable in obtaining the loan for the due execution of the job in Exhibit A to the standard, specification and satisfaction of the Defendant.
With regards to the Appellant’s contention that having regard to the state of the law relating to damages for breach of contract, the learned trial Judge was wrong in awarding N160,000,000.00 as special damages. I had earlier on in this Judgment stated that there is no dichotomy between special and general damages in award of damages for breach of contract under the common law and in our legal jurisprudence. The remedy due a party who has suffered loss by reason of the other party’s breach of contract is damages flowing from the breach. The affected party is to be restored as far as money can do it, to the state or position as if the contract had been performed. In determining whether the trial court was right in awarding N160,000,000.00 for breach of contract, I must herein ascertain whether the N160,000,000,00 flow from the breach having earlier held that obtaining loan to execute the contract was within the contemplation of the parties. In other words whether the N160,000,000.00 is the sum that can restore the Respondent to her position had Exhibit A been performed.
The Respondent at pages 162- 163 of the record paragraph 4 – 7 gave evidence as to how she took the loan of N160,000,000.00 from a sister company, Hospitechno Nig Ltd at a monthly 10% interest rate to ensure satisfactory execution of Exhibit A. The Respondent’s case is that because the Appellant failed and or refused to pay as per Exhibit A, she fell into a great loss as she could not repay the loan promptly which made the interest to be running until at such a time the loan could be repaid. The trial court found that the Appellant was in breach and ordered that the sum due the Respondent for the work already executed be paid. It is my view that since the N160,000,000.00 borrowed for the purposes of executing the contract was meant to be recovered upon payment of the contract executed, once the Appellant pays for the work executed her obligation to the Respondent with regard to the loss on the loan sum is settled.
However where there is a breach as in this case where the Appellant failed to pay within 75 days after payment was due, the damages flowing from the breach which the Respondent is entitled to is that which will put her in a position as if the Appellant paid her within 75 days after submission of her invoices. The damages recoverable owing to the facts of this case, cannot therefore be the loan sum but the interest that accrues as a result of breach of contract.
However, the court does not engage in an act of Philanthropy. It does not grant relief not sought by a party. The courts are legal establishments for the adjudication of matters and award of reliefs duly sought for by parties in their litigation.
For a court to grant a claim, the relief must have been pleaded, evidence adduced on it and it would have been sought for. From the record the N160,000,000.00 was pleaded, evidence led on how it was obtained but its grant was not sought for rather it was the 10% monthly interest on it that was sought. The Respondent did not therefore abide by the trinity requirements that a relief can only be granted if it was pleaded, proved and sought. Unokan Enterprises Ltd v. Omuvwie (2005) 1 NWLR (pt.9 07) 293. Order 45 Rule 14 of the High court of Rivers State (Civil Procedure) Rules, 2006 relied on by the Respondent cannot apply having regard to the facts and circumstances of this case. Order 45 Rule 14 (supra) allows the court to make an order not expressly sought for if the court considers it necessary for doing Justice. Impliedly, the court cannot make an order granting a relief not sought for if it will work injustice on any of the parties. The facts before the court in the instant case show that the Respondent borrowed N160,000,000.00 to execute jobs for the Appellant. It is also the fact that the Appellant did not pay the Respondent for jobs executed as at when due. Not in dispute is the fact that the learned trial Judge in his Judgment ordered the Appellant to pay the money due the Respondent for the jobs executed. The Appellant on the face of the record did not appeal against this decision of the trial court. It follows that once the Appellant pays for the jobs executed for her by the Respondent, the loss by reason of the loan sum of N160,000,000.00 would have been settled. The only loss that will be outstanding would be the interest if any arising from the said loan.
Accordingly, to order the Appellant to pay the loan sum of N160,000,000.00 to the Respondent after paying the money due the Respondent for the jobs executed will amount to paying the Respondent two times for the same jobs. This will certainly work injustice on the Appellant which is not within the contemplation of order 4 Rule 14 of the High court of Rivers State (Civil procedure) Rules, 2006. For this I hold that order 45 Rule 14 (supra) is inapposite to the facts and circumstances of this case.
This court cannot therefore uphold the trial court’s award of N160,000,000,00 special damages to the Respondent based on it.
The learned trial Judge at pages 316 lines 13-16 of the record, herd that the Respondent did not prove their claim to interest on the loan obtained in Exhibit G for the sum of N160,000,000.00. The trial court having held loan was obtained; in the case of this breach of contract and with the facts and circumstances, what will naturally flow from the breach or put the Respondent back in his position as if the Appellant performed her part of the contract is the reimbursement of the interest that accumulated on the contract sum from the date the Appellant ought to have paid the Respondent and uptill when she finally pays for the jobs executed. Since the Respondent proved she collected the loan of N160,000,000.00 there was no need to prove anything further as interest naturally flows. All she needed prove was the rate of interest which was not challenged to be 10% monthly. I do not agree with the learned trial Judge’s holding that the Respondent was not entitled to interest on the loan sum of N160,000,000.00. I rather hold that the damage recoverable by the Respondent in view of the Appellant’s breach is the 10% monthly interest on the loan sum of N160,000,000,00 from 75 days after 4th March, 2006 when the invoices were submitted. Unfortunately there is no cross appeal on the decision of the trial court regarding the 10% monthly interest on N160,000,000.00
Since there is no cross appeal by the Respondent on this issue, I cannot make any decision on it. I simply hold that the learned trial Judge was wrong in awarding N160,000,000.00 special damages to the Respondent, Issue is resolved in favour of the Appellant.
ISSUE 2
The Appellant on this issue submitted that the award of N26,000,000.00 as general damages for breach of contract by the trial court was not legally justifiable as there is no dichotomy between special and general damages for breach of contract. Consequently a claim for both special and general damages is not appropriate in an action for breach of contract as a claim for general damages belong to the realm of tort. See Multichoice v. Azeez (2010) 15 NWLR (Pt. 1215) 40 at page 53; PZ and Co. Ltd v. Ogedemgbe (1972) 1 All NLR (Pt.1) 202 at 2005 – 206; Swiss-Nig Wood Industries Ltd v. Danilo Bogo (1970) NCLR 423; Sosan v. HFP Engineering (Nig) Ltd (2004) 2 NWLR (Pt. 861) 546 at 576.
The learned senior counsel for the Appellant also submitted that parties are bound by the terms of their contract. She referred to Articles 8.9, 6.2.1 and 6.2.5 of Exhibit A to submit that the learned trial Judge erred in awarding general damages of N26,000,000.00 outside the express terms of the contract.
It was Appellant’s further submission that because the Respondent submitted various invoices on various dates, each invoice attracted its own cause of action the moment it was dishonoured. The cause of action for failing to pay for the various invoices cannot be lumped together for the purposes of assessing the damages payable for non payment. Evidence from the Respondent on the date each invoice was submitted and dishonoured would have determined the basis for the assessment of damages if any against the Appellant. It was not the duty of the trial Judge to have suo motu fixed a date for the alleged breach of contract and used that date to award damages.
The Appellant finally urged the court to hold that the learned trial Judge was wrong when he awarded the sum of N26,000,000.00 as general damages against the Appellant in favour of the Respondent for breach of contract and that the trial Judge was in error by using 4th March, 2006 date as the bench mark for assessing the quantum of damages payable to the Respondent by the Appellant.
In response the Respondent submitted that the award of the sum of N26,000,000,00 as general damages to the Respondent was right and proper given the circumstances of this case. The learned counsel for the Respondent contended that the general damages flow naturally from the wrongful act of the Appellant complained of. 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 Industry Ltd (2003) 13 NWLR (Pt.837) 412.
It was further argued for the Respondent that the learned trial Judge found that the Appellant was in breach of the contract for 26 months and awarded N1,000,000.00 for each month to assuage the Respondent for the obvious losses that resulted from the breach. It was submitted for the Respondent that the assessment of how much should be awarded as general damages is the exclusive discretionary preserve of the trial court based on the peculiar facts of the case.
Learned counsel urged the court to discountenance the submissions of the learned senior counsel for the Appellant and hold that the award of the sum of N26,000,000.00 was right and proper.
While resolving issue 1, I had extensively discussed the nature of damages recoverable by a Plaintiff who claims damages for breach of contract. It is trite law that general damages cannot be awarded in a breach of contract action as general damages belong to the realm of torts. See P. Z and Co Ltd v. Ogedemgbe (1972) 1 All NLR (P. 1) 202 at 205 206; Swizz – Nig Wood Industries Ltd V. Danilo Bogo (1970) MCLR 423; Baraus v. Cubits (Nig) Ltd (1990) 5 NWLR (pt.152) 630 at 646 – 657; Sosan v. HEP Engineering (Nig) Ltd (2004) 2 NWLR (Pt.861) 546 at 576, Multichoice Nig Ltd v. Azeez.
In the event of breach of contract as in the instant appeal, the measure of damages is the loss flowing naturally from the breach and incurred in direct consequence of the violation. The damages recoverable must be reasonably foreseeable by the parties and must have been foreseen by them at the time of contract – as ipso facto resulting if any of the parties broke faith. In award of damages for breach of contract, there is no room for claims that are speculative or sentimental except when such is specially provided for by the terms and conditions of the contract. It is such special provision that can be deemed as special damages in an action for breach of contract.
In cases of breach of contract therefore, outside of damages naturally arising from the said breach, no other form of general damages can be entertained. Accordingly, I hold that the learned trial Judge was in error when he awarded general damages to the Respondent.
When the learned trial Judge arrived at the conclusion that the Appellant broken faith with the Respondent, he would have awarded damages flowing naturally from the losses the Respondent incurred, as a result of the Appellants withholding of the money due her for job satisfactorily executed for the Appellant. It is upon this that the learned senior counsel argued that by Exhibit A, the damages recoverable by the Respondent are subject to Article 6.2.1, 6.25 and 8.9. These Articles provide as follows:
Article 6.2.1 “COMPANY shall pay CONTRACTOR each undisputed invoices within seventy five (75) days of COMPANY’S receipt of the invoices. However, should COMPANY give CONTRACTOR notice of CONTRACTOR’s failure to comply with the terms of this Contract including COMPANY’s environmental and safety requirements and applicable safety laws and regulations and CONTRCTOR continues to be in non-compliance, COMPANY may withhold payment until such time that CONTRACTOR is in compliance”.
Article 6.2.5 “If COMPANY makes payment on an undisputed invoice later than 15 days after such payment is due, the invoices shall be subject to a penalty payment equal to (1%) of the invoice amount”.
Article 8.9 “Consequential Damages. Notwithstanding any other provisions of this contract, in no event shall either Party be liable to the other for any indirect or consequential damages which may be suffered by such party in connection with the performance of this contract, including, but not limited to, loss of profit of product”.
Article 6.2.1 provides that the Appellant shall pay each undisputed invoice within 75 days of submission of invoice. It went on to provide circumstances under which the Appellant can withhold payment of undisputed invoice. Article 6.2.5 is a penalty clause, it imposes penalty of payment of one percent of the invoice amount should the Appellant fail to pay an undisputed invoice 15 days after it is due.
The learned senior counsel for the Appellant contended that the only damage recoverable by the Respondent if any is the one percent of the undisputed invoice by virtue of 6.2.5. On its own, Article 8.9 is an exclusion clause and relates to consequential damages. Owing to these Articles relied on as reproduced and submitted above; the proper understanding of these three terms is eminent. The terms are damages, penalty and consequential damages.
Damages are the sum of money which a person wronged is entitled to receive from the wrongdoer as compensation for wrong. See Frank Gahua, the Law of Damages 1 (1936); Blacks Law Diction 9th Ed. Penalty is a sum of money extracted as punishment for a civil wrong, as distinguished from compensation for the injured party’s loss. It is an extra charge against a party who violates the terms or provisions of a contract. See Blacks Law dictionary, 9th Ed. Penalty is therefore a sum which a party undertakes to pay or forfeit in the event of a breach of contract. Penalty is fixed, not as a pre-estimate of probable damages, hut as a punishment whose threat is aimed at preventing the breach. See Charles T. McCormick, Handbook on the Law of damages page 146 at 699 (1935). Consequential damages refer to losses that do not flow directly and immediately from an injurious act but that result indirectly from the act. See Blacks Law dictionary, 9th Ed.
From the meanings of the terms examined above, it will be correct to say that damages and penalties are not the same.
While damages in a breach of contract is to restore the injured party to a position he would have been had the contract been performed, a penalty is meant to punish the defaulting party for breach. Penalty being distinct from damages, the award of penalty where necessary does not in any way stop the court from awarding damages that naturally flow from the breach. A penalty clause in my view is an extra-measure to ensure a party to a contract is deterred from breaking the terms of contract at will.
The presence of penalty clause in a contract is not a bar to the award of damages.
I am therefore not urged by the submission of the learned senior counsel that the inclusion of Article 6.2.5 (penalty clause) in Exhibit A means no damages except the penalty can be awarded in favour of the Respondent, Rather I hold that while the Appellant, for the breach, would have been liable for the one percent penalty provided for by Article 6.2.5 if the said penalty was pleaded, the court would have still been at liberty to award damages that naturally flow from the breach- and within the contemplation of the Parties.
Article 8.9 which is an exclusion clause is a contractual provision providing that a party will not be liable for damages for which that party would otherwise have ordinarily been liable. An exemption clause may take many forms, but one common thing in all such clauses is that they exempt a party from a liability which he would have borne had it not been for the clause. In some cases the clause protects a party not only from a contractual liability but even from liability that may arise in Tort. See P. S. Atiyah; an Introduction to the Law of Contract 167 (3d ed. 1981).
Simply put, an exclusion clause seeks to modify or exclude the prima facie obligations that arise when an agreement is entered.
The Courts have generally been hostile to exclusion clauses. Once there is any ambiguity in the clause, it will be construed against the person who is trying to rely on the clause. Accordingly, an exclusion clause provision must be comprehensive and obviously clear that it covers the liability. Under the common law, a party can only be availed of an exclusion clause when such party abides by the terms and conditions of the contract. For an exclusion clause to be effective, it must pass at least these 3 tests:
(a) It has been incorporated into the agreement
(b) Its wording must cover the liability in question.
(c) It must not be prohibited by statute or other law.
See Stevens & Bolton LLP March, 2012.
In International Messengers Nigeria v. Pegofor Industries Ltd (2005) ALL NLR 234; the Court reinstated the common law rule that exemption clause is not available to a party who is in fundamental breach of a contract.
Since Article 8.9 specifically and directly excludes liabilities in the area of consequential damages, the Appellant cannot hide under it or be exempted from award of damages, the natural consequence of her breach of Exhibit A, Article 8.9 of Exhibit A therefore, did not preclude the trial court from awarding damages. I therefore hold that the award of damages in the circumstances of the case was not in defiance of the terms of Exhibit A. The only question relevant here, is whether the award of N26,000,000.00 can be described as damages that naturally arose from the breach, The trial court held that the Appellant was in breach of contract for 26 months and awarded N1,000,000.00 for each month. The learned senior counsel for the Appellant contended that there was no evidence on record for which the trial court would have based to arrive at 4th March, 2006 as the bench mark for assessing the quantum of damages payable for the breach by the Appellant in favour of the Respondent.
Indeed from the amended statement of claim the Respondent did not plead the different dates the invoices were submitted. However the Respondent pleaded the various invoices submitted to the Appellant in respect of the work satisfactorily executed. See paragraphs 7 and 12 of the amended statement on oath. These invoices were admitted in evidence as Exhibit E. Apart from the fact that Exhibit E speaks for itself, under cross examination PW1 testifying for the Respondent testified that on Exhibit E are two dates. The one on top and another below. He said the date below on all the invoices are dates of submissions.
He added that the 1st invoice was submitted on 4th March, 2006 by hand. See pages 238 and 256 of the record. This explains why the learned trial Judge based on 4th March, 2006 as the bench mark to determine the quantum of damages payable for the breach. The learned trial Judge did not therefore suo motu fix a date for the breach of contract. While it is correct that from Exhibit E, various invoices were submitted on different dates. I hold that since 4th March, 2006 the date the learned trial Judge based to assess damages for the breach is in tune with Exhibit E and evidence, any assessment based on said date is supported by evidence and does not occasion a miscarriage of Justice more so since it is the exclusive preserve of the discretion of the trial court to assess damages flowing from the breach.
Having earlier held that the Respondent is entitled to damages and that the learned trial Judge did not err by basing his assessment of damages on 4th March, 2006 nor was the award of damages in conflict with the terms of Exhibits A, I want to consider the appropriateness of the quantum of damages awarded.
While resolving issue 1, I held that the damages naturally flowing from the loan of N16, 000,000,00 obtained by the Respondent for the execution of Exhibit A cannot be the loan sum since the Appellant had been ordered to pay the money for the jobs the Respondent had executed which she withheld; but the interest accruing on the loan sum until the Appellant paid the money she withheld. In resolving issue 2, I also held that Article 6.2.5 is a penalty clause, inserted in Exhibit A to punish a party that is in specific breach mentioned therein and is distinct from damages that naturally flow from breach of Exhibit A. Accordingly the presence of Article 6.2.5 in Exhibit A is not a bar to the assessment and subsequent award of damages that flow naturally from breach of Exhibit A by the Appellant. I had also in resolving issue 2 held that the learned trial Judge erred in awarding general damages in an action for breach of contract but held that the only damages recoverable by the Respondent is that which naturally flow from the fact that the Appellant withheld the money due her for about 2 years after she had satisfactorily completed some jobs and submitted invoices undisputed to the Appellant. Consequent upon the above positions I have held in this Judgment, it is my humble view that the sum of N26,000,000,00 is too high as damages that flow from the Appellant’s breach. I am conscious of the fact that this court loathes to interfere with the award of damages by the trial court. However, I hold the view that this is a good case where this court can interfere for the fact that the lower court applied a wrong principle of law in assessing the damages to wit: assessing and awarding general damages in a claim for breach of contract. See Sosan v. HEP Engineering (Nig) Ltd (Supra).
In interfering with the trial court’s award of N26,000,000.00 general damages, I hereby set same aside and in its place in the interest of justice, I award damages of N15,000,000.00 as flowing from the Appellant’s breach of Exhibit A by withholding the various sums of money due the Respondent for about two years.
From all I have said above, issue no. 2 is substantially resolved in favour of the Appellant.
ISSUE 3
The learned senior counsel reproduced paragraphs 4, 5, 6 and 7 of the Respondent’s Amended statement of claim, part of the Judgment of the lower court where the learned trial Judge reviewed the pleadings of the Appellant and the Respondent at page 310 of the records to submit that the learned trial Judge was wrong when he held that the Appellant did not specifically deny the Respondent’s averments in paragraphs 4, 5, 6, and 7 of the Amended statement of claim.
However, Mrs. Essien, SAN, noted that the findings of the learned trial Judge at page 310 of the record relate to paragraphs 10, and 11 of the Respondents Amended statement of claim which were specifically denied by the Appellant in paragraphs 14(C) and 15 of the Amended statement of defence.
In response, the Respondent admitted that the findings of the learned trial Judge at page 310 of the record referred to by the Appellant in their submission relate to paragraphs 10 and 11 and not paragraphs 4,5, 6 and 7 of the Respondent’s Amended statement claim.
Learned counsel for the Respondent urged the court to hold that the trial Judge was right when he held that the Appellant did not specifically deny the averments in paragraphs 10 and 11 of the Amended statement of claim.
In resolving this issue I shall reproduce, paragraphs 4, 5, 6, 7, 10 and 11 of the Respondent’s Amended statement of claim; paragraphs 14 (C) and 15 of the Appellant’s Amended statement of defence and the findings of the learned trial Judge under focus found at page 310 of the record.
Amended statement of claim, paragraphs 4, 5, 6, 7, 8, 10 and 11.
(4) The contract was for three years valued at USD $16,441,748.00 (Sixteen Million, four Hundred and Forty-one Thousand, Seven Hundred and Eighty-four dollars.
(5) The Claimant diligently and professionally executed the contract and completed the following specific work order under the contract.
(a) Funiwa Revamp – Conceptual and engineering study.
(b) North Appoi Revamp – Conceptual and Front Engineering Design (WA-027):
(c) Manpower supply for Terminal Projects Group Lekki (W. J. Small):
(d) Conversion of storage tank to wash tank services -Detailed Engineering Design.
(e) Escravos Export system – conceptual Engineering Study.
(f) Warri UPS upgrade – Detail Engineering Design.
(g) Lekki Power System Phase 2 upgrade Front and Engineering Design.
(h) CPDEP Phase 2 – Scope of work Development (Transportation Plan. Site Development Packages and preferred including Basis for Design.
(i) Ewan GSM shelter – Detailed Engineering Design:
(j) Okam GGCP HP Flare System.
(6) The total monetary value for the above work done under the contract are USD 800,670.86 (Eight Hundred Thousand, six Hundred and seventy dollars, Eighty-six cent) and N48,407,436.56 (Forty-eight Million, Four Hundred and Seven Thousand, Four Hundred and Thirty-six naira, Fifty-Six kobo).
(7) The claimant submitted to the Defendant the invoices for the work done and same has been with the Defendant. The claimant shall at trial found upon and rely on the various invoices submitted to the Defendant in respect of the work done The Defendant is hereby given notice to produce the originals at the trial.
(8) It was a basic requirement of the contract that payment of all work done shall be made to the claimant being the contractor by the Defendant 75 days from the date of submission of invoices.
(9) By the intendment of the contract, the claimant being the contractor was expected to raise money and execute the contract to the standard, specification and satisfaction of the Defendant.
(10) In anticipation of being paid within 75 days of the submission of the invoices and in order to meet the very high standard of the Defendant, the claimant borrowed funds from various places and took the following loans from its sister companies at very high interest rate namely.
(a) Kirkwood Oil & Gas = N884 Million
(b) Bencap Nigeria Ltd = N560 million
(c) Hospitechno Nig Ltd = N160 million
The claimant shall found upon and rely on all documents evidencing the loan.
(11) These monies were secured in November, 2004 at 10% interest per month on each of the sums and since the claimant has been unable to pay back the principal sum and the interest are still running and has accumulated well over (N7 billion naira in interest charges.
See Pages 237 – 238 of the record.
Amended statement of defence; paragraphs 14(C) and 15 14(C) The Defendant is not aware and is not a party to the decision of the Claimant to collect interest yielding loans to finance the job.
(15)That the amount claimed by the Claimant in paragraph 23(sic)of the Amended Statement of Claim is bogus, made up and without any basis as the Defendant does not owe such an amount.
See Pages 248 of the records.
The findings and hording of the learned trial Judge:
“In the amended statement of claim, the claimant pleaded that in furtherance of the execution of the contract entered into between the parties and in anticipation of the provision for payment of submitted invoices for work done within 75 day, it obtained loans from its sister companies at a very high interest rate amounting to N1.6 Billion to enable it execute the entire contract envisaged in Exhibit A. It was also averred that the non payment of the submitted invoices as and when due to the Defendant has led to high interest on these loans now amounting to well over N7 Billion. These are the averments in paragraphs 4, 5, 6, and 7 of the amended statement of claim, see page 310 paragraph 2 of the record.”
From the record as evidenced by the pleadings and findings of the learned trial Judge reproduced above, contrary to the findings and decision of the learned trial Judge, the averments in paragraphs 4, 5, 6 and 7 of the Respondent’s Amended statement of claim are unconnected with the issue of loans or the accumulated interest of N7 Billion but rather they deal with the value of the contract, the specific work orders executed and the submission of invoices. While paragraphs 4, 5, and 6 were not in issue; by the Appellant’s paragraphs 11 and 12 of her Amended statement of defence, the averment in paragraph 7 of the Respondent Amended statement of claim which was in issue was challenged and denied.
Both parties agreed that the learned trial Judge’s findings and decision reproduced above relate to paragraphs 10 and 11 of the Amended statement of claim as he mistakenly reffered to paragraphs 4, 5, 6, and 7 of the Amedment statement of claim. The justice of the appeal will not allow the said mistake of the learned trial Judge to form the basis for this court to simply hold that the trial court erred when it held that the Appellant did not specifically deny Respondents averments in paragraphs 4, 5, 6, and 7 of the amended statement of claim without more; especially when consideration of the exact paragraphs intended by the learned trial Judge in above referred findings and decision will not occasion any miscarriage of justice. Accordingly, I will consider whether the Appellant specifically denied the averments of the relevant paragraphs 10 and 11 of the Amended statement of claim.
A Defendant must specifically refuse to admit an averment in a statement of claim. He does not do this satisfactory by simply pleading. “Defendant is not in a position to admit or deny (the particular allegation in the statement of claim) and will at trial put the Plaintiff to proof; “Defendant does not admit correctness” (of a particular allegation in the statement of claim), is also an insufficient denial. See Messrs Lewis & Peat (N.R.I.) Ltd V. A.E. Akhimien (1976) LPELR – SC. 115/1975. In other words a traverse of an averment in a pleading must not be general.
A traverse of pleadings or an averment in pleadings must be common, specific or special traverse. This is to say, it must be an express denial of a particular allegation in the opposing pleading in the terms of the allegation, followed by a tender of issue or formal offer of point denied for trial. A traverse must explain or qualify the denial. Having carefully perused paragraphs 14(C) and 15 of the defence vis a vis the Respondent’s paragraphs 10 and 12 of claim. I hold the opinion that the said paragraphs of Amended statement of defence are general. I therefore have no reservations but to hold that the learned trial Judge was correct in his holding that the Appellant’s paragraphs 14(C) and 15 of the Amended statement of defence did not qualify as a legal traverse of paragraphs 10 and 11 of the Respondent’s Amended statement of claim.
Issue 3 is resolve against the Appellant.
ISSUE 4
The Appellant referred to the learned trial Judge’s holding in awarding N160,000,000.00 special damages that the Appellant did not join issues with the Respondent on the claim for the N7,000,000,000.00 (seven billion naira) only damages. See page 313 of the record. It was submitted that the law is that damages are deemed to be in issue whether special or general and whether the alleged damages are part of the cause of action or not. Also the Appellants submission is that, any allegation that a party has suffered damages is deemed to be traversed unless specially admitted. See Osuji v. Isiocha (1989) 3 NWLR (Pt. 111) 623 at 640 paras B – C; Ngilari v. Mothercat Limited (1991) 13 NWLR (pt.636) 622; Nigerian Bank for Commerce and Industry v. Integrated Gas (Nig) Ltd (2005) 4 NWLR (Pt. 916) 617 at 648. See also Order 17 Rule 5 of the Rules of High Court.
Reproducing, paragraphs 14(c) and 15 of the Appellant’s Amended statement of defence, the learned senior counsel submitted that the evidence of the Appellant’s witness, DW1 at page 250 of the record and the submission of the Appellant’s counsel were based on the averments in the aforementioned paragraphs. She urged the court to resolve the issue in favour of the Appellant.
In response, the Respondent counsel submitted that the learned trial Judge was right when he held that the evidence of the Appellant’s witness which was not borne out of the pleading go to no issue. He contended that for an issue to be joined on the pleadings there must be a clear and direct denial of the fact by the other party.
Learned counsel urged the court to hold in favour of the Respondent.
Let me reiterate that in breach of contract, assessment of damages is based on the loss sustained by the injured party which loss was either in the contemplation of the parties or is an unavoidable consequence of the breach. See Ijebu-Ode Local Govt. V. Adedeji Balogun & Co (1991) 1 NWLR (Pt.166) 138. General damages are not recoverable in an action for breach of contract. What can be deemed as special damages in a claim for breach of contract are speculative damages otherwise known as remote damages; or punitive damages which though generally not recoverable but is recoverable as special damages if pleaded and proved. Damages as recoverable in an action for breach of contract is in law in its own family. The principles of law governing its award therefore stand distinct.
I have read the authorities cited by the learned senior counsel, they all relate to award of general damages and special damages, non is on award of damages in breach of contract. The cases are therefore not relevant to the instant appeal.
The learned trial Judge’s decision under challenge is:
“It would appear that the Defendant took this head of claim for granted as being bogus and did not join issue with the Claimant in their pleading. The submission of the Defendant counsel that the case of the Defendant was that the loans were not part of the understanding between the parties, and that the Claimant presented itself as financially capable and for which he relied on Article 4.71 of Exhibit A, is not based on the pleadings of the Defendant as the Defendant made no such averments in its amended statement of defence. The evidence of DW1 to that effect in his further written statement on oath having not been based on any pleading goes to no issue.” See page 313 paragraphs 4 of the record.
Counsel must base his address on pleaded facts as litigation is made up of a combination of fact and the law. A counsel cannot rightly raise an issue of fact in the final address. Issues of fact can only be raised on pleadings in a trial where pleadings are filed See C.C.B v. Onyekwelu (1999) 10 NWLR (Pt.623) 452; Kwajaffa v. B. O. N. Ltd (1991) 1 NWLR (Pt. 587 423.
Parties are strictly bound by their pleadings and they are not allowed to make a case that is at variance with their pleadings.
Evidence at variance with the averments in pleadings must be disregarded or discountenanced by the court. It is immaterial that such evidence had been admitted by the court. So evidence led on a fact not pleaded goes to no issue and liable to the expunged if unwittingly admitted. See Okoko v. Dakolo (2006) NSCQR (Vol- 27) 259; Allied Bank (Nig) Ltd v. Akubueze (1997) 6 NWLR (Pt. 509) 374; Ito v. Ekpe (2000) 2 SC 98.
I have read Order 17 Rule 5 of the Rules of High court of Rivers State, 2006. The rule in my understanding does not stand contrary to the well established principle of law governing pleadings and evidence not supported by pleadings which is the import of the learned trial Judge’s holding reproduced above.
What need be determined herein is whether the evidence of DW1 and the submission of the learned senior counsel are supported by the pleadings in paragraphs 14(c) and 15 of the Appellant’s Amended statement of defence.
I had earlier in this Judgment reproduced these paragraphs.
I also agreed with the learned trial Judge that said paragraphs were not properly traversed.
Furthermore, I have calmly read the evidence of the Appellant’s witness particularly paragraphs 3 and 4 of the further written statement on oath at page 250 of the record. The evidence is in line with paragraphs 14(C) and 15 of the Appellant’s Amended statement of claim. However, on the submission of the learned senior counsel that the case of the defendant was that the loans were not part of the understanding between the parties, and that the claimant presented itself as financially capable, is not borne out of the Appellant’s Amended statement of defence.
While I hold that the learned trial Judge was wrong to hold that DW1’s evidence was not in fine with paragraphs 14(C) and 15 of the Appellant’s Amended statement of defence; I hold that the learned trial Judge was right in finding that the learned senior counsel’s submissions referred to above was not supported by the Appellant’s Amended statement of defence. I resolve this issue in favour of the Respondent.
May I note at this point that although the Appellant indicated that the award of interest at the rate of 10% on the entire judgment sums until the entire judgment is liquidated together with a cost of N30,000,00 were part of the decision of the lower court complained of, no ground of appeal was formulated nor was any issue raised on these part of the judgment of the lower court. I hold that the Appellant abandoned these heads of complaint.
Accordingly the decision of the lower court on these two heads stands.
In all, the appeal succeeds in part and is to that extent allowed. I set aside the Judgment of the learned trial Judge awarding N160,000,000.00 as special damages and N26,000,000.00 general damages as erroneous, not based on established principles relating to award of damages for breach of contract.
I order that the Appellant shall pay to the Respondent:
(a) The sum of N15,000,000.00 being and representing damages flowing from their loss for breach of contract by the Appellant.
(b) Interest at the rate of 10% on the entire Judgment sums until same, has been fully liquidated together with N30,000.00 cost both being part of the decision of the lower court which though complained of but were later abandoned.
I make no further order as to cost.
M.L. TSAMIYA, J.C.A.: I agree.
ALI ABUBAKAR B. GUMEL, J.C.A.: I have had the privilege of reading before now the lead Judgment of my learned brother, Onyemenam, JCA. I agree with all his reasonings and conclusions. I adopt them as mine in also allowing this appeal in part. I abide by all the consequential orders of my learned brother as set out in the lead judgment.
Appearances
M. A. ESSIEN SAN WITH MR. A. E. EJALAM,
MR. B. I. OMOFAMA, MR. EYINDA AND MR U. J. OJIKOR For Appellant
AND
MR. I. BLUE-JACK For Respondent
