Shell Bp Petroleum Dev. Co. v. Jammal Engineering (Nigeria) Limited (1974)


Shell Bp Petroleum Dev. Co. v. Jammal Engineering (Nigeria) Limited (1974)

by Branham Chima.

Registered in the prescribed manner.

This appeal involves two cases which were consolidated for hearing by the High Court, Lagos State (Dosunmu, J.). The parties to both cases are the same save for the fact that the plaintiffs in one are the defendants in the other.

In the first of the cases, i.e. Suit No. LD/160/69, the plaintiffs are Shell BP Petroleum Development Co. of Nigeria Ltd., and the defendants Jammal Engineering (Nigeria) Limited. The writ of summons in that case, as finally amended, is endorsed as follows: “The plaintiff claims against the defendant: A declaration that the agreement partly written partly oral made between the plaintiff and the defendant between June 1968 and February 1969 whereby the defendant agreed to lease to the plaintiff upon certain terms, properties situate at and being houses Nos. 11, 12, 13, 14 and 2 Jammal Estate off Gerrard Road, Okoyi is a valid and subsisting agreement and is binding upon the defendant. An Order of specific performance of the said agreement. 5, 000 Pounds damages for defendant’s wrongful failure or neglect to complete the houses and deliver possession of the same at the time stipulated in the agreement. An Injunction restraining the defendant its servants or agents or otherwise howsoever from leasing or parting with the possession of the said houses Nos. 11. 12. 13. 14 and 2 Jammal Estate, Gerrard Road, Ikoyi otherwise than by leasing the same to or by duly effectively vesting the same in plaintiff. Alternatively Repayment of the said deposit of 2, 500 Pounds together with interest thereon at the rate of 5 percent per annum. 12, 750 Pounds being general damages for breach of the said agreement.

The other action was commenced some five or six weeks later as Suit No. LD/243/69. The plaintiffs therein are Jammal Engineering (Nigeria) Ltd., and the defendants Shell BP petroleum Development Co. of Nigeria Ltd. The writ is endorsed for the following claims: “The plaintiff’s claim against the defendant is for a declaration that the “tenancy agreement” dated 14th March, 1969 and purporting to have been made by the plaintiff of the one part and the defendant of the other part is null and void and not binding on the plaintiff. In the alternative the plaintiff claims the said “agreement” is voidable and should be set aside.”

The pleadings of the plaintiffs aver that both the plaintiffs and the defendants are limited liability companies that by agreement dated the 30th August, 1968 between the parties. The plaintiffs agreed to hire and the defendants agreed to let to them eight houses belonging to the defendants, five of which (Nos. 2, 11, 12, 13 and 14 in Jammal Estate, Ikoyi) are to be let for respective terms of three years starting from the dates of completion of each house and the yearly rent of 1,900 Pounds (or N3.800) per house. The first two years rents to be paid down and on terms to the effect that the lessees should pay all rates and execute all internal repairs and the lessors should pay the ground rent and be responsible for all structural repairs.

The statement of defence avers that the deposit of 2,500 Pounds (or N5, 000) was duly returned to the plaintiffs, that the land on which the houses were being erected was State land within the meaning of the State Land Act, cap. 45, that the defendants’ title to the said land is subject to the provisions of section 7 of that Act, that the houses were uncompleted at the date of the issue of the writ of summons, that there is no sufficient memorandum in writing of any agreement between the parties as required by law and that in any case if there was any such binding agreement, as the plaintiffs claimed, “the said plaintiffs have elected to waive any claim for specific performance and to treat any breach by the defendants of their obligation to complete the houses by specific dates as a discharge of such contract” .

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I. (PRESCRIBED MANNER). Whether the lease not registered in the prescribed manner as stipulated in section 14(1) of the Registration of Titles Act Cap. 181 is invalid?

RESOLUTION: IN RESPONDENT’S FAVOUR. (It has to be registered in the prescribed manner).
‘If then the document Exhibit W is not made in the form prescribed by section 79(1) and thereby characterised a deed by section 80(1), it must follow, as it does, that Exhibit W has not been made “in the prescribed manner” within the contemplation of section 14(1) of the Act. Strictly speaking, section 14 of the Act does not make the use or employment of the statutorily forms mandatory and indeed subsection (3)of that section expressly exempts from the operation of sub-section (2) leases for terms less than five years where the leased land is occupied under the lease. In the present case, therefore, Exhibit W had not been made in the “prescribed manner” and apparently it is exempted from the requirements of registration and fuming especially when, as the evidence goes in this case, the lessees are in occupation of the houses by virtue of the lease. The truth however is that in any case Exhibit W cannot be registered or filed as it was not made in the manner prescribed by the Act: in short, it is a dealing by a registered owner with registered lands outside the Registration of Titles Act. That Act does not create new tenures and/or interests and the respective interests of owner, chargee, transferee or chargor at or before registration are governed by the provisions of section 28 of the act.’
‘The section does not convert the interest or estate of anyone whose registration is either not contemplated at all or is not yet completed into equitable interests and, undisputably, until and unless such interest is completely registered as prescribed by the Act, the registered owner remains the owner of his land for all purposes of the Registration of Titles Act. But clearly, section 42(1) of the Act affords protection to dealings generally with registered land outside the Act, although by the proviso thereto the section postpones such interests as are created thereunder to those created in accordance with the Act.’
‘To put together the effects of the relevant sections of the Act, we point out that a lease by virtue of section 14 must be made “in the prescribed manner” in order to escape the proscription of section 28, to enjoy the protection of section 42(1) and to escape the disqualification of section 42(2). H, like Exhibit W, it is not so made, it does not comply with section 14(1) and section 28(1) (it need not comply with section 28(2) and apart from lacking the protection of section 42(1) falls within the disabilities prescribed by section 42(2). Now, section 42(2) requires that such dealings shall be effected under and in the manner required by the Act-a requirement which postulates that any disposition or dealing which discountenances it must be invalid under the Act. We are of the view that learned counsel for the defendants was right in his contention that the lease Exhibit W is void. Although section 14(1) has employed the word “may” in its requirement of compliance, it seems to us clear that where the dealing contemplated is one for which provision is made in the prescribed manner, the transferor or transferee has no alternative but to use such “prescribed manner” in order to make the disposition or dealing valid under the Act.’

‘We observe shortly that the submissions on behalf of the defendants must fail inasmuch as we had already found, as the learned trial judge did, that the plaintiffs established that there was between them and the defendants such an agreement as they have claimed. If there was, as indeed there is in the present case, a breach of an executory agreement, the remedy of damages for such breach is clearly available to the plaintiffs. The learned trial judge in the present case found as much when in his judgment he stated, concerning the plaintiffs’ claim for damages, as follows:- . “Before considering this claim I want to make it clear that I hold that the defendants committed a breach of the contract, which I found established, when they wrote on 10/3/69 as in Exhibit “cc” saying “we regret to inform you that we have no desire to let the remaining five houses anymore, and we regret any inconvenience caused as some of these houses are now required by the Ministry of Defence, Lagos and the rest will be utilized by us”.’

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‘We are clearly of the opinion that in this respect the learned trial judge was in error of law. His line of reasoning completely overlooks the fact that the contract between the parties was an executory contract. The measure of damages appropriately is the loss flowing from the contract and unless the element of speculation was in the contemplation of the parties at the time of the contract, whatever else could have accrued to a party as a result of that speculation on the contract is not relevant. That was in effect the decision of the House of Lords in the case of Bain v. Fothergill (supra). In Wright v. Dean (supra), Wynn Parry, J., as he then was, explained and applied the principle expounded in Hadley v. Baxendale (supra). We are in agreement with his explanation and application of that principle. Hollington Brox. v. Rhodes (supra) is a classic example of an assessment of damages based on actual expenses incurred by the plaintiffs as a necessary result of the breach by the defendants of their contract in that case. The principle of assessment established by the authorities is clear generally. It is that a party in breach of his contract is liable in damages and the aggrieved party is entitled to such an owing necessarily from the breach in that either the injury suffered by the aggrieved was in the contemplation of both parties at the time of the institution of the contract or is an inevitable consequence of the breach. With respect to the case in hand, as we have stated before, such damages must be assessed with reference to any loss actually suffered by the plaintiffs as a result of the defendants’ breach to let the houses to them: the loss calculated not on the figures of what possibly they could have expended or suffered but on the figures of what they actually expended or suffered.’
‘The learned trial judge had found that there was no evidence from the plaintiffs on this aspect of the case (he described it undoubtedly erroneously as “special damages”) and indeed before us learned counsel for the plaintiffs conceded that there was no such evidence. In that case plainly there should have been no award, not because the plaintiffs are not entitled to it but because they failed to supply the necessary materials on which an assessment of their loss or damages can be based. The arguments in respect of this ground of appeal must be upheld in favour of the defendants.’]
‘In the circumstances therefore, we make the following orders: (i) With respect to Suit No. LD/160/69 we: (a) dismiss the defendants’ appeal against the judgment for a declaration of contract between the parties as well as their appeal against the refund of the deposit of 2,500 Pounds (or N5, 000) to the plaintiffs with respect to this latter claim we modify the order of the High Court and order that the defendants should refund the said amount of N5,000 to the plaintiffs with interest at the rate of five per cent per annum on the amount from the 16th December, 1968 to the 29th March, 1969 and (b) allow the appeal of the defendants against the order awarding damages of 3,000 Pounds (or N 6,000) against them and set aside the said order of the High Court, Lagos in this respect. (ii) We dismiss the appeal of the plaintiffs against the orders of the High court refusing to grant specific performance of the contract and injunction as well as plaintiffs’ appeal on the adequacy or otherwise of the amount of damages awarded. with respect to Suit No. LD/243/69 we allow the appeal of the defendants (i.e. the plaintiffs in that suit-Jammal Engineering (Nigeria) Ltd.) and grant them the declaration therein sought that document Exhibit W dated the14th March, 1969, is void as a lease or me propemes therein purported to be assured. We set aside the order of the High Court, Lagos, as to costs and direct that if any monies had been paid in consequence of this order as to costs such monies should be refunded. We order that both in the High Court and in this Court the parties should bear their own costs. We direct that the foregoing shall be the judgment of the Court.’

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The final exercise of judgment must of necessity involve a consideration of all the correspondence that is properly put in evidence by both sides, all the correspondence tendered in order to establish the case and all that produced in order to disprove the existence of a contract. It is only after such detailed consideration that a tribunal can fairly come to a conclusion as to whether or not the parties actually arrived at an agreement. See Thomas Hussey v. Horne-Payne (1879) 4 App. Cas. 311. The task of analysing the several letters and attempts to reconcile the one with the other is undoubtedly a very difficult one calling for the most serious examination of each and every one of several documents until the tribunal is able to say whether a contract is indeed established. — Coker JSC.

The rules for granting amendments of pleadings or proceedings are very flexible and a great deal depends on the discretion of the judge or tribunal. Where there has been no breach of any relevant rule of law in that respect a party opposing the grant of leave to amend such pleadings or proceedings has a rather uneasy task and unless he can establish prejudice, unnecessary expense, irreparable inconvenience or lack of good faith, the hands of the court are free. In the present case, it was not shown and has not been shown to us that the learned trial judge did not properly exercise his discretion to grant leave to amend and we cannot accede to the ground of appeal which complains about this. — Coker JSC.

Both sides have failed or succeeded in parts on this appeal and it is fair to desist from making any order as to costs. — Coker JSC.

Shell Bp Petroleum Dev. Co.

Jammal Engineering(Nigeria) Limited

Coker, J.S.C.




[A]s far back as 1854 in the case of Hadley v. Baxendale (1854) 9 Ex (Ch. 341, where at p. 354 of the Report, Alderson, B. expressed the law as follows: “Now we think the proper rule in such a case as the present is this: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such a breach of contract should be such as may fairly and reasonably be considered either arising naturally, according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it.”





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