IN THE SUPREME COURT OF NIGERIA
ON THURSDAY, THE 15TH DAY OF APRIL 1976
B.A.WAHABI (Trading as B.A. Wahabi and sons) ...................................... APPELLANT
WILFRED OMONUWA ........................................... RESPONDENT
BEFORE: Sowemimo, Madarikan and Idigbe, JJ.S.C.
The question on appeal was whether the damages awarded by the trial court for the defendant's failure to erect a building within the agreed time should be set aside.
Saying that the quantum of damages for loss occasioned by the delay is the value of the use of the building during the period of delay and that the value generally being taken in the rental value, the trial Judge awarded "special damages" based on evidence of the rental value of the building and also awarded a further sum as general damages.
Where a builder fails to complete a building in the time agreed to in the contract;
(a) the normal measure of damages is the value, to the owner of the building, of the use of it during the period of delay and this must be proved by evidence, for instance, of alternative accommodation arrangements made by the owner during the period of delay, for it is always in the reasonable contemplation of parties to a building contract (unless the contrary is therein stated or implied) that an owner would normally make use of his building;
(b) If, however, it is sought to recover the rental value, as consequential loss occasioned by the delay, there must be evidence (implied or expressed) from the contract or aliunde that it was in the contemplation of the parties, at the time of entering into the contract, that the building when completed was to be let at a rent.
Hadley v. Baxendale (1854) 9 Exch. 341
Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd and anor. (1946) 2 K.B. 528, 539-540.
Sowole v. Nigersol Construction Ltd. (1970) 1 ALR 435, 443-444 explained.
Swiss-Nigerian Wood Industries Ltd. v. Bogo (1970) 1 ALR 423, 430-431.
APPEAL allowed. Award of special damages set aside; that of general damages reduced.
Chief F.R.A. Williams for the appellant.
Dr Omonuwa (Obasuyu with him) for the respondent.
Idigbe, J.S.C. (delivering the judgment of the Court):-The question in this appeal is whether the damages awarded by the trial court in favour of the respondent should be set aside. In the High Court at Benin, the respondent claimed from the appellant £2000 "as special and general damages" for breach of contract under which the appellant agreed to erect a building in accordance with a building plan, exhibit J1, referred to in a written agreement, (the principal agreement) dated 7th May, 1970 exhibit A (and also in a supplemental agreement exhibit A1) and to hand over the same, within a period of 20 (twenty) weeks from the execution of the principal agreement, to the respondent. The relevant portion of the statement of claim filed by the respondent reads:-
"(10) The plaintiff has in consequence of the breach of the agreement between the plaintiff and the defendant, suffered special and general damages.
PARTICULARS OF SPECIAL DAMAGES
"(1) Estimated rent from the premises at £5,000
Part per annum from October 1970 to
February 1972 (expected time of completion of the building by the plaintiff £6,609
(11) Additional cost of completion over and above the contract sum £7,400
General Damages £6,000
Grand Total £20,000"
After a review of the evidence adduced on both sides, the learned trial Judge made the following observations:-
"... I find as a fact that the defendant (i.e. appellant) failed to complete the building within the 20 weeks of the date of execution of Exh. A as contracted for. I find as a fact that he abandoned the work at the time this action was brought and I find as a fact that there was no irregularity in payment (by the respondent) ... On the issue of loss occasioned by the delay the quantum of damages recoverable is the value of the use of building during the period of the delay. The value generally being taken is the rental value. See also Chief M.S. Sowole v. Nigersol Construction Ltd. SC. 77/69 dated 16th October, 1970.
There is no evidence before me on which I can assess the cost of completion as there is no evidence on which I can find that the building has been completed as contracted. There is only an estimated value given by the plaintiff's 3rd witness and although, I accept his figure (sic) is subject to the varies of the building made. On the loss of rent occasioned by the delay the claim is proved. I accept the rental value given by plaintiff's 2nd witness of £5,000 per annum and allow the claim which is £6,000...The Plaintiff is also entitled to general damages which is assessed measured at £400. The plaintiff will haved £7,000 general and special damages and (1) hereby award him £7,000...or
N14,000 damages with costs..."
(Brackets & italics are ours).
This appeal is from the above judgment. In this Court learned Counsel for the appellant, Chief F.R.A. Williams, having conceded the appellants' liability for breach of the contract between him and the respondent has not challenged the finding of the trial court against the appellant on the issue. He has, however, attacked the award of damages made in favour of the respondent, and has submitted that there is no basis for the award of £6,600
(N13,200.00) as "loss of rent occasioned by the contractor's (i.e. appellant's) delay" which, according to him, is in the nature of "consequential loss" and which, he contends, is not available to the respondent on this claim and on the facts adduced in support of it. A second point taken by learned Counsel for the appellant relates to the award of £400 (N800) as "general damages" in favour of the respondent. It is his contention that the award is in-supportable there being no evidence that the respondent suffered any real damage; and in the circumstances, the respondent can only be entitled to "nominal damages" Learned Counsel for the respondent, Dr Omonuwa, indeed, did not offer any effective submission in reply to the above contentions of Chief F.R.A. Williams.
The above contentions and submissions of learned Counsel for the appellant, undoubtedly, call for a general consideration of the law relating to the measure of damages in contract. The law relating to the subject has not changed since the well-known statement of Alderson B. in Hadley v. Baxendale (1854) 9 Exch. 341 at 352-355 but the application of the rules which emerge from the statement of Alderson B. has not always been free from difficulty and, we think, it is desirable and useful to set down here in full the very lucid restatement of the rule (Hadley v. Baxendale) by ASQUITH L.J. in Victoria Laundry (Windsor) Ltd v. Newman Industries Ltd. & anor. (1949) 2 K.B. 528, which reads:-
"(1) It is settled that the governing purpose of damages is to put the party whose rights have been violated in the same position, so far as money can do, as if his rights had been observed...This purpose, if relentlessly pursued, would provide him with a complete indemnity for all loss de facto resulting from a particular breach, however improbable, however unpredictable. This, in contract at least, is recognised as too harsh a rule. Hence,
(2) In cases of breach of contract the aggrieved party is only entitled to recover such part of the loss actually resulting as was at the time of the contract reasonably foreseable as liable to result from the breach.
(3) What was at that time reasonably so foreseable depends on the knowledge then possessed by the parties or, at all events, by the party who later commits the breach.
(4) For this purposes, knowledge 'possessed' is of two kinds; one imputed, the other actual. Everyone, as a reasonable person, is taken to know the ordinary course of things and consequently what loss is liable to result from a breach of contract in that ordinary course. This is the subject matter of the 'first rule' in Hadley v. Baxendale. But to this knowledge which the contract-breaker is assumed to possess whether he actually possesses it or not, there may have to be added in a particular case knowledge which he actually possess, of special circumstances outside the ordinary course of things', of such a kind that a breach in those special circumstances would be liable to cause more loss. Such a case attracts the operation of the 'second rule' so as to make additional loss also recoverable.
(5) In order to make the contract-breaker liable under either rule it is not necessary that, he should actually have asked himself what loss is liable to result from a breach. As has often been pointed out, parties at the time of contracting contemplate not the breach of contract, but its performance. It suffices that if, he had considered the question, he would as a reasonable man have concluded that the loss in question was liable to result.
(6) Nor, finally, to make a particular loss recoverable, need it be proved that upon a given state of knowledge the defendant could, as a reasonable man foresee that a breach must necessarily result in that loss. It is enough if he could foresee it was likely to result...if the loss (or some factor without which it would not have occurred) is a 'serious possibility' or a 'real danger'. For short, we have used the word 'liable' to result. Possibly the colloquialism 'on the cards' indicates the shade of meaning with some approach to accuracy..."
[see (1949) 2 K.B. at 539-540].
Now, by the agreement (Exhs. A & A1) the appellant undertook to erect and complete a three-storeyed building in accordance with the specifications set down in the plan Exh. J1. There is nothing on the face of Exhs. A & A1 to show that the building was required by the respondent for purposes of letting to third parties or, at least, for purposes other than his own use and that of his family; and we are unable to accede to the submission, by which learned Counsel for the respondent sought to justify the award by the trial court of £6,600 as damages arising from loss of rental, which was to the effect that because the building to be erected by the contractor was to be provided with "a large sales-hall" and "a store" that, by itself, was sufficient warning and clear indication to him (the contractor) that the building was intended for letting, so that it must be taken, in the circumstances, to have been the contemplation of parties that loss of rental was liable to result from delay in the completion of building. The case of Sowole v. Nigersol Construction Ltd. SC. 77/69 on which reliance was placed by the trial court for the view that the quantum of damages recoverable in respect of loss occasioned by delay in the completion of a building contract is always the "value of the use of the building during the period of the delay" is, indeed, no authority for such a general proposition. The decision Sowole (supra) must be confined to the facts in that case from which it is clear that, when the agreement was entered into by parties for the erection of commercial buildings, it was in their contemplation that the building were to be subsequently let to third parties. In this connection, we refer to a relevant portion of the judgment of the court in that case which reads:-
"The parties knew the purpose for which the duplex house was to be used, because the condition for the defendants' agreement to advance a loan for the erection of the building, which later on was substituted by a loan from the Anglo-Israeli Bank, was that the said loan was repayable from the rent that would accrue from the building on completion. It was therefore in the contemplation of the parties that the building was for the purpose of profit-making..."
1970) A.L.R. at 443-444
There is, of course, the statement in McGregor on Damages to the effect that "if the builder (in a building contract) fails to complete the building by the time required by the contract the normal measure of damages should be the value of the use of the building during the period of delay" (Italics supplied-see McGregor Damages 13th Ed. P.559 Para 820) which we fully endorse; but the balance of the statement in that same paragraph, which reads: "the value being taken as rental value", must, we think, be read with caution and subject to the statement in the immediately succeeding paragraph which reads: "for consequential losses, such as loss of user profits or sales profits, analogous contracts and the general principles of contract damages must again be relied upon" (Italics supplied). There is no doubt that where a builder fails to complete, in time as agreed in the terms of the contract, a building he undertook to erect the normal measure of damages should be the value, to the owner of the building, of the use of it during the period of delay; and this must be a matter to be proved by evidence, which in the case in hand is, indeed, lacking. In this regard evidence may be given for instance, of other accommodation arrangements the owner has had to make (such as rents paid for alternative accommodation) in the interim (i.e. period of delay) for it must be the ordinary consequence following, in the usual course of events, from the breach; and it always is in the reasonable contemplation of parties to a building contract (unless the contrary is herein stated or implied) that an owner would normally make use of his building. If, however, it is sought to recover "the rental value" of the building as loss (or, more correctly, consequential loss) occasioned by the delay in completion of the same, then there must be evidence (implied or expressed) from the contract document or aliunde that it was in the contemplation of the parties, at the time of entering into contract, that the building when completed was to be let at a rent and this is the basis of the decision in Sowole v. Nigersol Construction Ltd. (supra).
It follows from the settled principles of the law relating to measure of damages in contract, and this Court has in previous cases held the view, that:-
"In the preparation of the claim for, as well as in the consideration of an award in consequence of, a breach of contract, the measure of damages is the loss flowing naturally from the breach and incurred in direct consequence of the violation. The damages recoverable are the losses reasonably foreseable by the parties and foreseen by them at the time of the contract as inevitably arising if one of them broke faith with the other. In the contemplation of such a loss there can be no room for claims which are merely speculative or sentimental unless these are specially provided for by the terms of the contract. It is only in this connection that damages can be properly described as 'special' in the conception of contractual awards and it must be borne in mind that damages normally recoverable are based on the normal & presumed consequences of the breach complained of...Thus the terms 'general' and 'special' damages are normally inept in the categorisation of damages for the purpose of awards in case of breach of contract. We have had to point out this before...and we must make the point that apart from damages naturally resulting from the breach no other form of general damages can be contemplated ..." (Italics supplied). (See Swiss-Nigerian Wood Industries Ltd. v. Danllo Bogo SC14/70 of 3rd July, 1970, reported in (1970) 1 A.L.R. 423 at 430-431).
And on the same subject, this Court in the case of Gregoire Agbale v. National Motors Ltd. observed as follows:-
"It is undesirable to refer in contract to general and special damages as normally the only damages, other than those arising naturally, flow from consequences specifically provided for by the parties which would not otherwise naturally arise from a breach of the contract..." (Italics supplied) (see SC 20/68 of 13/3/70 unreported but see (1970) 2 A.L.R. 266 at 273).
We have earlier on stated that there is no evidence-express or implied-that it was in the contemplation of the parties at the time of entering the contract, in the case in hand (Exhs A & A1) that the building to be erected was intended for letting to third parties so as to bring into operation the 'second rule' in Hadley v. Baxendale (supra) or the third and fourth propositions (of Asquith L.J.) in Victoria Laundry v. Newman (supra). Accordingly, the first contention of learned Counsel for the appellant must succeed and the award of £6,600 as damages arising from "loss of rents occasioned by the delay" must be set aside.
We now turn to the argument relating to the award by the trial court of £400 (
N800) as general damages. There can be no doubt that the delay in the completion of the job contracted for by the appellant must and did in the circumstances of this case result in loss to the respondents and for which the appellant must pay. General damages are those which the law implies in every breach of contract (see also Marzetti v. Williams (1830) 1 B F A d.415), and where no real damage has been suffered may be a trifling amount. Although we agree with the learned Counsel for the appellant that the evidence on which the trial court properly have assessed the general damages suffered by the respondent is somewhat deficient, we certainly do not share his views that only "nominal damages" are due, in the circumstances of this case, to the respondent. Perhaps the greatest difficulty in the way of the respondent, at any rate, is the absence of evidence of the monetary value of the ultimate shortfall in the performance of the entire work (i.e. the amount required for completion of the building by the appellant.) There is no evidence before the trial court that the building was ultimately completed by the respondent and, if so, at what extra cost but there is evidence from one of his witnesses (even if only an estimated value), that it will take as much as £10,000 (N20,000) to complete the building at the time when this case was filed in court; and although the learned trial Judge accepted this figure with some reservation, we think, it is some basis for the view that this, certainly, is not a case for the award of "nominal damages".
The quantification of general damages in terms of money is, however, a matter for the court (i.e. the jury under proper direction from the judge-or by the judge acting as a jury where the trial is without a jury) and in a majority of cases no precise measure can be indicated although the award necessarily includes compensation for damage incapable of exact proof in terms of money. But as stated by Martins. B in an old case, general damages are "such as the jury may give when the judge cannot point out any measure by which they are to be assessed except the opinion and judgment of a reasonable man" (see Prehn v. Royal Bank of Liverpool (1870) LR.5 Exch. 92 at 99-100; (Italics supplied). As already stated, we are not in any doubt that the respondent is entitled to general damages (and certainly NOT a "nominal sum") from the appellant and while it may have been desirable to send this case back to the High Court Benin for the trial Judge to quantify damages in this respect, we are very much mindful of the difficulties and inconvenience that procedure would entail as the learned trial Judge who heard the case is no longer sitting in that jurisdiction. (For a similar situation see: Jamal Engineering Co. v. Wrought Iron Ltd. (1970) 2 A.L.R. 295 at 309-310); and we consider in the circumstances of this case and on the available facts on the record an award of
N500, as general damages reasonable. Accordingly, the award by the trial court of the sum of £400 (N800.00) as general damages must be set aside.
In the final analysis, this appeal succeeds and the judgment of the High Court of Bendel State holden at Benin in suit B/72/71 dated the 2nd day of February, 1973, awarding to the respondent "the sum of £7000 (
N14,000.00) as special and general damages", including the costs of £120 ( N240.00) is hereby set aside and in substitution therefore it is ordered that judgment be entered in favour of the respondent in the sum of N500.00 (five hundred Naira) and costs in the lower court assessed at N240.00; and this shall be the judgment of the lower court. The appellant shall have the costs of this appeal assessed at N120.00 (one hundred and twenty Naira) whereof the sum of N72.42 represents his out-of-pocket expenses.