(1961) All N.L.R. 84


Division: Federal Supreme Court

Date of Judgment: 16th March, 1961

Case Number: FSC 109/1960

Before: Brett, F.J.J.

             Taylor, F.J.J.

             Bairamian, F.J.J.


The appellant made a contract with the respondent whereby the latter would supply a quantity of logs by instalments. He was to deliver them to one Ligali. Ligali was to check the deliveries, ship and sell them, and thereafter the appellant would pay. From time to time the respondent informed the appellant that deliveries had been made, and so also did Ligali. On the faith of such information, the appellant paid the respondent direct several sums of money amounting to £10,047-5s-0d and gave Ligali over £30,000. Ligali said he had shipped the logs. In fact, the respondent did not deliver any logs to Ligali, and Ligali did not ship any. The appellant sued the respondent for the repayment of £10,047-5s-0d, the total amount he had himself paid to the respondent personally. In cross-examination the appellant said this:-

"Out of the transaction concerning the 10,000 tons of logs I have received from Ligali £62,000 approximately."

The trial Judge decided that, as the plaintiff had received some benefit from the transaction, the consideration could not be said to have wholly failed, and dismissed the claim. On appeal by the plaintiff-


There were two separate and distinct contracts-one of sale with the respondent, and another of agency with Ligali. The respondent was to supply the logs, Ligali was to take delivery and ship them to Europe. The payment made by Ligali concerned his obligations to the appellant under the agency contract, and there was no evidence that the appellant received the £62,000 from Ligali in discharge of the respondent's obligations as well. Therefore, the appellant was entitled to claim back from the respondent the money he paid to the respondent personally for some bogus deliveries of logs.

Appeal allowed.

Cases referred to:-

Hirachand Punamch v. Temple (1911) 2 K.B. 330; 80 L.J.K.B. 1155; 105 L.T. 277.

Rowland v. Divall, (1923) 2 K.B. 500; 92 L.J.K.B. 1041; 129 L.T. 757; 67 Sol. Jo. 703.

Hunt v. Silk, (1804), 5 East, 449; 102 E.R. 1142.

APPEAL from High Court, Lagos

Moore (with him Akinsanya) for Appellant.

Odesanya for Respondent.

The following Judgment was delivered:

Bairamian, F.J.:-This is an appeal by the plaintiff against the Judgment given in Suit No. LD/278/1959 of the High Court of Lagos on the 7th December, 1959, which dismissed the suit with costs.

Briefly put, the plaintiff's claim was for the repayment of £10,047-5s-0d which the plaintiff was deceived into giving the defendant as the price of logs which the defendant had supplied, but which in fact the defendant had not supplied at all.

The plaintiff and the defendant were old friends. The plaintiff had another friend by the name of Abdul Raheem Ligali, who was a business associate of his. The plaintiff made a contract with the defendant whereby the latter was to supply by instalments ten thousand tons of logs; these he was to deliver to Ligali, who would check the deliveries, and thereafter the plaintiff would pay. From time to time the defendant informed the plaintiff that he had delivered a certain quantity; and from time to time Ligali informed the plaintiff that the defendant had delivered a certain quantity; and on the faith of what he was informed the plaintiff gave Ligali over £30,000, and paid the defendant himself £10,047-5s-0d. Afterwards the plaintiff discovered that the defendant had not delivered a single log. Ligali was supposed to ship the logs to Europe on the plaintiff's behalf: the plaintiff discovered that Ligali had not shipped any. The plaintiff averred that Ligali and the defendant were facing criminal charges about the £42,000. The present suit was against the defendant for repayment of the £10,047-5s-0d given him direct.

The defendant put in a defence, which came to this: he had no contract to deliver logs, and did not deliver any; it was true that the plaintiff gave him the moneys making up £10,047-5s-0d, but it was for logs which the plaintiff told him he had received and for which he asked the defendant to pay the moneys to the persons who had supplied the logs to the plaintiff; and the defendant paid the moneys to those persons; so he was justified in not acceding to the plaintiff's claim. The defendant gave no evidence.

The plaintiff was the sole witness. In cross-examination he was asked questions about Ligali; and one of his answers was:-

"Out of the transaction concerning the 10,000 tons of logs I have received from Ligali £62,000 approximately."

His other evidence has already been summarised.

The learned Chief Justice accepted his evidence, which proved that he had a contract with the defendant, that he paid the defendant £10,047-5s-0d for logs, and that the defendant did not supply any. The defendant had obtained the money by false pretences, and the plaintiff was therefore entitled to repayment. But the Judgment goes on to say:-

Nevertheless, the plaintiff received from Ligali about £62,000 purporting to be the proceeds of the sale of the logs or some of them under the abovementioned contract. There is no evidence where this money came from but it is a fair assumption to make that the defendant and Ligali were engaged in a gigantic fraud.

So they were; and there is no evidence of the source from which Ligali paid the £62,000. But there is, with respect, some confusion of thought in saying that:-

the plaintiff received about £62,000 purporting to be the proceeds of the sale of the logs or some of them under the above-mentioned contract.

"The above-mentioned contract" harks back to the earlier statement in the Judgment that:-

There was an agreement between the plaintiff and the defendant whereby the plaintiff agreed to purchase from the defendant who agreed to supply to the plaintiff 10,000 tons of logs.

The £62,000 which Ligali paid the plaintiff were not paid under the contract between the plaintiff and the defendant. Ligali doubtless paid that money under the contract between himself and the plaintiff, because of representations which he had made to the plaintiff. This becomes clear when one looks at the two letters which the plaintiff put in as exhibits. In the letter of the 25th January, 1957, the plaintiff, writing to J. B. Shogbola about Ligali's account, says this:-

It appears Mr Ligali is fooling everybody about the outcome of 10,000 undersize Obeche logs bought and delivered to him out of which he alleged shipment value £67,000.

In the letter of the 2nd April, 1957, which the plaintiff wrote to Ligali himself, he says:-

I think it is now high time for you to submit to me without further delay a full statement of undersize logs account total tonnage of which is 10,000 tons purchased by me at £5-10s-0d per ton plus duty at £1-2s-6d duly paid to you. . In view of the fact that the whole 10,000 tons had now been shipped by you at a selling value of £10 per ton. ... I leave further comments till you are able to submit a statement showing where about the whole capital and net profit of about £50,000 lies. Copy of my letter of 25th January, 1957, to Mr J.B. Shogbola is repeated below once more.

Ligali had alleged a shipment value of £67,000 and a sale value of £100,000; the profit would have been £33,000. Apparently the plaintiff paid Ligali £67,000 less £10,047-5s-0d which he paid the defendant-that is nearly £57,000. In his oral evidence he said he paid Ligali over £30,000. The amount paid to Ligali is not clear; and if this had been a case between Ligali and the plaintiff, it might have been necessary to clear it up. Here it is sufficient to say that the plaintiff had a separate claim against Ligali, who had taken his money, pretending it was for logs received and shipped or to be shipped to Europe for the plaintiff's profit, but using it no doubt for his own profit instead. Ligali paid the plaintiff £62,000; but that payment concerns the obligations of Ligali to the plaintiff, and I cannot see how any discharge, whether partial or entire, of Ligali's obligations by Ligali can avail the defendant.

There are cases in which a stranger to a contract between A and B pays A some money in order to discharge the debt of B, which precludes A thereafter from making any further claim against B: e.g. Hirachand Punamchand v. Temple, 1911, 2 K.B. 330. In the case in hand there is no allegation and no evidence that the plaintiff received the £62,000 from Ligali in discharge of the obligation of the defendant as well as of Ligali himself.

There was confusion in this case, which apparently arose in this way. The plaintiff was embarking on an enterprise which involved him in two separate and distinct contracts-one of sale, with the defendant, and another of agency with Ligali: the defendant, and another of agency with Ligali: the defendant was to supply 10,000 tons of logs; Ligali was to take delivery and ship the logs to Europe; and the plaintiff has kept apart his rights against each of them under his respective contract. As both contracts related to the same 10,000 tons of logs, it was perhaps a natural slip to speak of them as one "transaction" of 10,000 tons of logs. Another factor which perhaps contributed to the confusion was the fraud practised by the defendant and by Ligali apparently helping each other in representing to the plaintiff that the defendant had supplied logs-which enabled Ligali to pretend that he was shipping or had shipped them. Thus, although there were two separate and distinct contracts, the defence fused them into one "transaction" in the cross-examination of the plaintiff, as if it had been a case of one contract only between the plaintiff on the one hand and, on the other, the defendant and Ligali, and argued that the plaintiff could not sue the defendant for money had and received on a consideration which failed totally. That presentation and argument was unwarranted, but it succeeded; and the confusion having been created, as I must with respect say, it pervades the Judgment, which proceeds to say that, as the plaintiff received some benefit from the transaction, i.e. £62,000, the consideration cannot be said to have wholly failed, and that the plaintiff cannot both retain the £62,000 and claim over and above the return of the payments he has made under the contract. For that view the Judgment quotes a passage from Halsbury's Laws of England, 3rd Edition, Vol. 8, paragraph 421, which states that:-

A complete failure of the consideration of a contract occurs where one of the contracting parties fails to receive some benefit or valuable consideration which springs from the root and is in the essence of the contract. If, however, he once received such a benefit then he has no remedy in this form of action.

With respect to the learned authors, I agree; but I believe that they have in mind the parties to the contract and none others. Two cases may be cited to illustrate that statement of the law.

In Rowland v. Divall, 1923, 2 K.B. 500, the plaintiff bought a car from the defendant and had it to use for a time; but it belonged to another, to whom he had to restore it; his contract being for the purchase of the car, as he did not get what he had bargained for, namely the property in the car, he was held entitled to claim his money back.

In Hunt v. Silk, 1804, 5 East, 449, the defendant in consideration for £10, agreed to give the plaintiff immediate possession of a house, make some repairs, and execute a lease within ten days. The plaintiff paid the £10 and went into possession, and continued in possession beyond the ten days, and then lease was not executed within the ten days; and he sued the defendant for the return of the £10. He lost because he had derived some benefit by the intermediate possession of the house.

Both cases deal with a contract between plaintiff and defendant. Such is also the case in hand: the plaintiff bargained with the defendant for the supply of logs, paid him for a number of pretended deliveries which the defendant for the supply of logs, paid him for a number of pretended deliveries which the defendant told the plaintiff he had made, but got no logs; he is entitled to claim back from the defendant the money he paid him for those particular bogus deliveries. The argument for the defendant, that the plaintiff has not been completely disappointed as he has received £62,000 from Ligali, merely creates confusion and clouds the issue in the present case.

The question in the present case cannot be affected by Ligali's payment. I think that the plaintiff was entitled to sue the defendant and should have had Judgment. Accordingly I would allow the appeal and enter Judgment for the plaintiff for £10,047-5s-0d with costs here and below: the costs in this Court to be forty guineas, and those below to be taxed.

Brett, F.J.:- I concur.

Taylor, F.J.:- I concur.

Appeal allowed.