United Calabar Co.v. Elder Dempster Lines Ltd. (1972)
LawGlobal-Hub Lead Judgment Report
COKER, J.S.C.
The United Calabar Company was the plaintiff in an action instituted by it in the High Court, Calabar, against the respondents, then defendants, and in which the plaintiff claimed special and general damages from the defendants for wrongfully terminating a contract of work entered into by the parties. The particulars of damages, later itemized, were expressed on the writ as follows:-
Special Damages 3,750 pounds
General Damages 6,250pounds
TOTAL 10,000pounds
By its statement of claim, later filed and delivered, the plaintiff avers that his firm were registered under the Registration of Business Names (Act) as stevedores; that by an agreement dated the 1st October, 1961, between the parties the plaintiff was to perform stevedoring services for and/or at the instance of the defendants at the port of Calabar for monetary consideration; that the plaintiff did perform these services and that in contravention of the provisions of the agreement between the parties the defendants by their letter of the 17th September, 1962, wrongfully terminated the contract. Paragraph 5 and part of paragraph 6 of the statement of claim aver as follows:-
“5. It was expressly provided by the said Agreement (Inter alia) as follows:-
“Clause 15: “This Agreement shall continue in force until the Thirtieth day of September, 1962 on which day it shall cease if either of the parties has given to the other three months previous notice in writing. If neither party has given notice to terminate this Agreement it shall continue in force subject to a termination at three months notice by either of the parties.”
- On the 17th September, 1962, the Elder Dempster Agencies Limited, Calabar, as agent for the defendant wrote to the plaintiff as follows:-
“I am directed by my Principals to give you 3 months notice in writing, terminating your work for this Company in accordance with the terms of the Stevedoring contract … ”
The defendants filed and delivered as well a statement of defence. In their statement of defence the defendants aver that the contract relied upon by the plaintiff was for a definite term or period of one year from the 1st October, 1961 to the 30th September, 1962; that the plaintiff did not generally become competent to perform the contract until the 31st October, 1962; that the stevedoring contract between them and the plaintiff was properly determined as the plaintiff would not provide “full insurance cover against all risks”, contained in paragraph 13 of the agreement, that the plaintiff had suffered no damages whatsoever by the termination of the contract and indeed that the plaintiff had accepted other jobs from the defendants which should amply compensate him for whatever he might have lost by virtue of the termination of the stevedoring contract. The statement of defence also states that a sum of 3220pounds had been deposited in the High Court, Calabar, and avers “that the said sum was sufficient to satisfy the plaintiff’s partnership’s claim against the defendant’s company.” Paragraphs 6 and 7 of the defendants’ statement of defence read as follows:
“6. Further and in the alternative the defendant-company state that at no time did the plaintiff-partnership furnish to the defendant any written confirmation to the defendant or its agent to the effect that the plaintiff-partnership has obtained full insurance cover against all risks contained in paragraph 13 of the agreement relied on by the plaintiff-partnership and the defendant-company will contend that upon such a breach of the aforementioned undertaking the defendantcompany terminated the contract relied upon by the plaintiff the said plaintiff having committed a breach of an essential term of the said contract.
- Further and in the alternative the defendant-company states that by a letter written by their agent Elder Dempster Agencies Limited dated 17th September, 1962 they gave notice to the plaintiff-partnership terminating the work of the said plaintiff forming the subject ofthe stevedoring contract the subject-matter of this action and further that the said notice of termination was duly received by the plaintiff-partnership who accepted the said notice of termination without any complaint save that on 14th December, 1962 the plaintiff-partnership by letter reference DC/IE/FIN for the first time acknowledged the receipt of the defendant-company’s aforesaid letter of termination and therein stated that the said notice of termination was invalid.”
At the trial, evidence was given on behalf of the plaintiff by Johnson Edet Effiong who described himself as the plaintiff’s managing director. He produced the copy of the written agreement (admitted as exhibit B) and testified that although the plaintiff duly and properly performed its own services as contained in exhibit B, yet on the 17th September, 1962 and by virtue of a letter of that date the defendants wrongfully determined the said contract. The letter of the 17th September, 1962 was also produced and admitted in evidence as exhibit C. The witness further testified as to payments made by the plaintiff for hire of offices, for emoluments and wages of staff and for hire of car. The witness was cross-examined by learned counsel for the defendants and part of the cross-examination is to. the following effect:-
“Q. Did you have a contract on insurance for your (plaintiff’s) workmen at the Calabar Port
A. No, I have completed negotiations for the contract in respect of my workmen’s compensation in connection with exhibit B. The premium has been quoted, but I did not pay the premium. I did not know of the insurance clause in the agreement (exhibit B) until 19th December, 1961. And as soon as I knew of it, I made the first approach to Guinea Insurance Company who refused to insure. I went to the African Insurance Company, after two other Insurance Companies had refused. Negotiations with this company took three or four months, and had not been completed before I got notice of termination from the defendant company (exhibit C).
Q. Why did you not complete the insurance contract
A. Because of the letter of termination given us (the plaintiffs) by the defendant company (exhibit C).
Q. Did you stop work for the defendant company on the 16th December, 1962
A. I did-the plaintiffs did.”
At the end of the plaintiff’s case the defendants announced that they would rest their case on the evidence given by the plaintiff so the defendants did not give any evidence and learned counsel appearing for them eventually addressed the court.
In the course of a reserved judgment, the learned trial judge, Balonwu : as he then was, dismissed the case of the plaintiff. At the end of his judgment he observed thus:-
“As regards the claim of 3,300pounds for loss of earnings, I attach no credence to the evidence of the plaintiffs’ managing director (p.w. 1) as to the increase on the number of ships that entered the port of Calabar immediately after the termination of the contract on the 18th December, nor to his other evidence that the plaintiffs’ losses as explained in their two letters, exhibits P and C, ceased as from the 1st aforesaid date. Even if that statement were true, there is no reliable . evidence of part profits from which a rough estimate of the future earnings could have been made, as the information contained in the plaintiffs’ file exhibit G has been belied by the contents of their two letters hereinbefore mentioned, to the effect that the plaintiffs were experiencing losses during the period.
So, even if the plaintiffs were entitled to any damages at all to which ” I hold they are not for reasons already stated), they have failed to prove the special damages claimed. As I have held, the defendant company’s notice (exhibit C) fell short of the agreed notice by 16 days,”but the plaintiffs have put forward a claim on the basis that the contract would continue for another year. But I have also held that it was not the defendant company who is in breach but they (the plaintiffs) who have by their conduct rendered it purposeless for the “‘defendant company to proceed further with performance. The claim for damages, therefore, fails.
Accordingly, I will dismiss the plaintiffs claim and order the sum of 3200pounds deposited in court by the defendant company to be returned.
The plaintiff has now appealed against this judgment and before us on the appeal it was complained that the judgment was against the weight of evidence and that the learned trial judge was wrong to have dismissed the case of the plaintiff after finding that the notice of termination given the plaintiff was not sufficient in law. Learned counsel who appeared for the plaintiff conceded that the items of special damages were not, as observed by the learned trial judge, proved but he contended that the termination of the contract, exhibit B, in the way it occurred was wrongful since by the letter exhibit C the defendants did not rely upon any of the grounds which they had stated in their statement of defence repudiating the contract. On the other hand, learned counsel for the dfendants argued that the defendants were entitled to rely on any grounds for the termination of the contract and that indeed they had relied for their action in the present proceedings on the failure of the plaintiff to provide an insurance cover in accordance with the terms of Clause 13 of the agreement of the parties.
The issue to be decided is simple. The fact of the agreement exhibit B is not in dispute. Clause 13 of that agreement provides as follows:-
“13. The Stevedore shall indemnify the Shipowner, his servants and Agents against all actions, proceedings, claims, demands, cost and liability whatsoever and whether under contract, under statute or at common law in respect of any damage to property or loss of life or personal injury to whomsoever and howsoever caused arising out of or in connection with this Agreement, which shall have been caused or contributed to by the act or default of the Stevedore, his servants or Agents or any other person for whose acts or defaults he may be liable under contract or otherwise howsoever. Written confirmation shall be furnished to the Shipowners’ Agents by the Stevedore to the effect that he has obtained full insurance cover against all risks contained in this clause.”
The agreement, exhibit B, was dated the 1st October, 1961, and is expressed to continue “in force until the 30th September, 1962”. Clause 15 of the agreement provides as follows:-
“15. This Agreement shall continue in force until the Thirtieth day of September, 1962 on which day it shall cease if either of the parties has given to the other three months previous notice in writing. If neither party has given notice to terminate this Agreement it shall continue in force subject to a termination at three months notice by either of the parties.”
Evidently, if the notice contained in exhibit C had not been given the contract would have ended by effluxion of time on the 30th September, 1962. The notice, exhibit C, given to the plaintiff by the defendants is dated the 17th September, 1962 and it reads thus:-
“Dear Sirs,
I am directed by my Principals to give you 3 months notice in writing, terminating your work for this Company in accordance with
the terms of the Stevedoring Contract.
Yours faithfully,
for Elder Dempster Agencies Ltd.
SG. J. E. HUGHES Acting Agent.”
The breach of Clause 13 by the plaintiff was admitted by him but it was contended on his behalf that the letter exhibit C had stated no grounds whatsoever for terminating the contract. Indeed, that much is clear from a perusal of exhibit C. The letter exhibit C states no actual reason for the determination of the contractual relationship which was to have terminated naturally on the 30th September, 1962 but which by the impression carried by the letter, exhibit C, it had tended to extend for another three months. Moreover, there was evidence that by their letter dated the 13th December, 1962 (admitted in evidence as exhibit D), the defendants had given yet further stevedoring jobs to the plaintiff. The letter, exhibit D, reads as follows:-
“Dear Sir,
We wish to advise that the undernoted vessels are due at Calabar on
the 14th inst.
m.v. “Falaha”
m.v. “Dunelmia”
m.v. “Martin Thore”
It seems possible that one or more of these vessels might sail on or after the 17th inst. and your work for this Company should cease at midnight of 16th inst.
Without prejudice to our letter of the 17th September, A.1015/C.S.15, you may wish to complete each of the aforementioned vessels irrespective of their date of departure.
If this is your desire perhaps you would be good enough to let us know by return so that we can make the necessary arrangements.”
The learned trial judge obviously did not agree with the view taken by the defendants as to the effect of the notice to terminate the contract Indeed, on that aspect of the case in the course of his judgment he commented thus:-
“Chief Okorodudu agreed that the notice, exhibit C was not an effective notice under the Agreement, being 13 days short, and argued that in order to comply with the said Agreement, it should have terminated the same on the 31st December, 1962. It seems to me that the only reasonable conclusion one can come to on a proper construction of the contract is that it was an agreement for one year certain, extending from the 1st October, 1961, to the 30th September, 1962, and that thereafter the duration is uncertain, it being terminable at any time after the latter date by three months’ notice given by either party. Since the defendant company did not terminate it on the 30th September, the earliest notice, in my opinion, it could properly and validly have issued in termination of the contract, would have commenced on the 1st October, 1962 and that notice, in compliance with the rule of computation as rightly submitted by Mr. Uwemedimo, would have expired on the 1st January, 1963. Thus the notice given by the defendant company actually fell short of the required notice by sixteen days.”
The learned trial judge nevertheless eventually dismissed the plaintiff’s case and thus gave judgment in favour of the defendants, on the basis that the plaintiff having failed to perform the obligations contained in clause 13 of the agreement exhibit B, he could not thereafter insist on the defendants keeping on the contract. He observed thus:-
“Applying these principles to the contract on the present case, I have come to the conclusion that the good sense of this case requires that the plaintiffs’ promise to insure against the risks of their operations, and the defendant’s promise to supply the power plant etc. of its ship free of charge for the carrying out of those operations, must be interdependent, and that the defendant company is not bound to continue to carry out its promise unless the plaintiffs have within reasonable time performed their promise to insure. It seems to me that the two promises are mutual covenants and that they go to the whole of the consideration on both sides.”
Before us, learned counsel for the defendants had submitted that the learned trial judge was right and that even if the defendants did not indicate any reasons for terminating the contract on the letter exhibit C, they could still at the trial put forward any other tangible cause for the termination. On the other hand, learned counsel for the plaintiff submitted that the defendants were not entitled to rely on a cause of termination which they did not state in their letter exhibit C. Whilst the contention of learned counsel for the defendants is correct, it fails to meet the actual point for determination in this case. Apart from the fact that the contention of learned counsel for the plaintiff is wrong it also fails to appreciate that the breach relied on by the defence was pleaded in their statement of defence in the case. It is well established that if a party alleges breach of contract for the wrong reason or for no reason at all, he may yet justify his action if there were in existence at the time facts or causes which would have provided a good reason for terminating the contract. In British and Beningtons Ltd. v. North Western Cachar Tea Company Ltd. [1923] A.C. 48, at page 71, Lord Sum principle of law applicable as follows:-
“So far the case does not affect the present argument, except is ground for saying that this point only went to damages unless until it was shown that the Spheroid’s cargo and that alone was available for delivery by the plaintiff. I do not think that the case reported, lays it down that a buyer, who has repudiated a contract for: a given reason which fails him, has, therefore, no other opportunity of defence either as to the whole or as to part, but must fail utterly. If he had repudiated, giving no reason at all, I suppose all reasons and all defences in the action, partial or complete, would be open to him. His motives certainly are immaterial, and I do not see why his reasons should be crucial.”
We think therefore that the defendants are entitled as they did to set up at the trial the reason or cause for which they contend they had determined the contract. The question then arises whether that cause having been shown they had put forward a defence to the action.
On the face of the findings of the learned trial judge, the notice given by the defendant was insufficient to determine the contractual relationship between the parties. By his other observations, it is manifest that what the learned trial judge meant by this is that although the notice was insufficient, yet the defendants are entitled to call off the contract by it (or otherwise) as the plaintiff was already in breach of a condition of the contract. The learned trial judge however overlooked the point that both parties had agreed as to the mode of determining the contract. That was provided for by clause 15 of the agreement exhibit B. The learned trial judge seemed to have placed undue importance on the noncompliance by the plaintiff with Clause 13 of the agreement exhibit B. That, with respect, is a mistaken view of the circumstances of the case. The agreement, exhibit B, was executed on the 1st October, 1961 and it more or less ran its whole course of time; and indeed the findings of the learned trial judge himself are to the effect that the letter of termination exhibit C could only have taken effect after the expiration of the contractual time in exhibit B. During all this time, according to the evidence, the defendants knew that the plaintiff did not comply with clause 13 and did nothing about that. They kept up the contract, exhibit B, and continued throughout to work with the plaintiff on that condition. Besides, by their letter exhibit D dated the 13th December, 1962 certainly after the discovery of the non-fulfilment of clause 13 by the plaintiff, and after the letter exhibit C, they were offering new contract jobs to the plaintiff, asking him to complete the offloading or handling of the vessels “irrespective of their date of departure. A case in which the facts are not dissimilar to the present one is Barrett Bros. (Taxis) Ltd. v. Davies [1966] 1 W.L.R. 1334 and in the course of his judgment in that case at page 1339 Lord Denning M.R. observed as follows:-
“Secondly, the letter … was a waiver of the condition. The principle of waiver is simply this: If one party by his conduct leads another to believe that the strict rights arising under the contract will not be insisted upon, intending that the other should act on that belief, and he does act on it, then the first party will not afterwards be allowed to insist on the strict rights when it would be inequitable for him so to do …. ”
The facts of the present case are clear, and it would be completely inequitable for the defendants, after allowing exhibit B to run out its natural course, and after writing exhibit D, and for the fact that the letter exhibit C did not state any reasons for determining their contract, to be allowed to contend that the plaintiff had been in breach.
There is yet another aspect of this case, and that concerns clause 15 of the agreement exhibit B and its implications. We think that even if there was a breach, it is manifest on the face of their contract (clause 13) that the parties intended that there should be the type of notice described by them to determine their relationship. A breach of an executory contract may be a good reason for the innocent party to repudiate the contract, but if the parties agree by their contract to a method of determination in the circumstances, that method must be followed if it is intended by either side to avail himself of the opportunity of repudiation. The position in this case is that the defendants by their conduct and action had elected to revive the contract after the natural expiration of the agreement exhibit B. They did this of their own accord by the letter exhibit D. But at the same time they proposed to determine it whenever it suited them to do so by raking up an old cause of complaint which they always knew about and in spite of which they had written their letter exhibit D. We do not consider that in these circumstances the defendants are entitled to rely upon the breach by the plaintiff of clause 13 of the agreement exhibit D in defence of this action.
We have come to the conclusion that the plaintiff had established that his contract with the defendants was wrongly determined and he is entitled to damages for such wrongful determination. As the learned trial judge observed, and as both counsel before us argued, the claim for special damages was not proved and the learned trial judge quite rightly refused to accede to that claim. But damages for breach of contract are such as arise naturally from a breach of the contract and the dichotomy into special and general damages can be confusing at the very least. The learned trial judge had made no assessment of general damages or indeed of damages arising naturally from this breach as he should have done even though he had decided to dismiss the plaintiff’s case, so that if he was found wrong by the court of appeal the necessity to order a fresh trial of that issue would be obviated. Besides, and this is most serious, the learned trial judge who tried the case at the High Court, Calabar, does not now exercise jurisdiction in that judicial division.
In the end, the appeal succeeds and it is allowed. The judgment of the High Court, Calabar, in Suit No. C/31/62 dated the 24th October, 1963, including the order for costs, is set aside and we make the following orders:-
(i) The case is sent back to the High Court, Calabar, for determination only of the issue of the quantum of damages to which the plaintiff is entitled and with the direction of this Court that the plaintiff had established the fact that the contract between him and the defendants had been wrongfully determined by the defendants.
(ii) The appellant, that is the plaintiff, is entitled to his costs in this Court fixed at 121 guineas.
(iii) The costs in the court below and in any case payable to the plaintiff shall abide the event and shall include the costs on the substantive issue of liability for the wrongful determination of the contract.
SC.420/1966
