J.OltD SOMEKVKLL OK HARROW—Abdul Hamid v. Odhavji Anandji 505
1955Present: Lord Morton of Henry ton, LordRadcliffe, Lord Keith of Avonholm, Lord Somervell ofHarrow and Mr. L. M. D. de SilvaABDUL 1TAM1D it al., Appellants, and ODHAVJI ANANDJI& CO., LTD., Respondents
Privy Council Appeal No. 4<i of 195-4
iS C. 240—D. C. Colombo, 21,162
Still of poods — II rOHtjftil refusal to accept the tjoods — Meaitirc of dumajcs—Specialdannuje—Sole of Goods Ordinance, s. 49.
Wlioro, in a contract of sale of goods, the buyer wrongfully refuses io taUodelivery of the goods and there is no available market for the rojoctod goodsat tlio time of tho refusal to accept , then the goods may bo sold as soon asbuyers can bo found. In such a case tho amounts realisod later, if reasonablesteps are taken, aro the best measure of their value at the date of tho breachof contract ; tho prima facie measure of damages that cun be cluiracd undersection 4'J of tho Sale of Goods Ordinance is the ditloronco between the contractprice and the value at tho date of tho breach.
PPKAL from a judgment of the Supremo Court delivered on March9, I95J. by Oratiaen J. (Onnasekara J. agreeing).
Jnftejih Dean, for tho defendants appellants.
./. F. Donaldson, for the plaintiffs respondents.
Cur. ado. vult.
May Mi, 1955.| Del ire red by Lord Somervell of Harrow]—
This is an appeal by buyers who wrongly rejected goods under acontract of sale. It is submitted on their behalf that the damagesawarded are excessive and should be reduced or a new trial ordered.
Under a contract dated 24th December, 1946, the appellants, merchantsin Colombo, agreed to buy from the respondents, merchants in Mombasa,60 tons of cowpcas as per sample approved at £51 per ton c.i.f. Colomboshipment per s.s. “ June Crest ”. The “ June Crest ” was then loading andarrived at. Colombo on or about I4tli January, 1947. Tho documentswith a bill of exchange for tho contract price attached were forwardedto the National llank and presented to the appellants. The appellantsrefused to accept tho bill which was noted for nOn-payment on 29thJanuary. On that day and again on tho 4th February, the respondentscabled to the appellants that unless the draft was paid within forty-eightor twenty-four hours respectively, the respondents would sell. There wasno reply7. On 5th March the respondents’ proctor wrote to tho appellants.
2J. X. U 10053—1,592 (8/55)
505 LORD SOMERVELL OF HARROW—Abdul Hamid v. Odhavji Anandji
I have been consulted by Messrs. Odhavji Anandji & Co., Ltd., ofMombasa, to take steps against you for the breach of contract enteredinto with them on 24th December, 1046, by your representative Mr. M. Y.Aboobucker, for the purchase by you of 60 tons of cowpeas at £51 perton c.i.f. Colombo.
The goods were duly shipped by s.s. “ June Crest ” which sailed fromMombasa on or about 28th December, 1946, with goods.
' You have failed to accept the goods and honour the relative Sill ofExchange for £3,134 3s. Id.
As you have failed to take delivery of, and pay for, the goods in spiteof my clients’ requests, my clients will now dispose of the goods onyour account and at your risk, according to their earlier intimations toyou,.and file action against you for the recovery of any deficit.
As the quantity of goods is very large the sale of the whole quantityin bulk at an auction sale may not be as advantageous as a sale by privatetreaty, and so my clients intend to have the goods sold by private tieatyunless you prefer a sale by public auction, in which event you mustinform mo forthwith..
Before doing so, I am giving you a final opportunity of fulfilling yourobligations under the contract.
If I don’t hear from you within 24 hours agreeing to meet the draftand take tho goods, my clients will proceed to dispose of the goods asstated above.
Tho disposal of the goods will be done by my clients without prejudiceto their legal rights under this contract and purely with a view to reducingthoir ultimate claim against you as far as possible.
.(Sgd.) S. A. S. HAMID.
The appellants replied on the 17th March.
With reference to your letter of the 5th instant addressed to Mr. AbdulLatiff Abdul Hamid, I am instructed to state that tho goods referredto are not the goods contracted for by my client’s representative andthat the same were found to have been .attacked by weevils and beensubject to some treatment before they were shipped and which hasadversely affected the quality of the goods. My client regrets that hecannot accept the goods in view of the damaged condition in which theyhave been received and as the goods cannot be marketed in Colombo orelsewhere. …. . ..
. My .client also denies liability for any.loss that your clients may sufferin respect of the said goods. .. .
..~’ ’ Yours faithfully,
In the meantime tho goods had been cleared by E. B. Creasy & Co., Ltd.,who acted for the National Bank. On 3rd April, 530 bags were deliveredto M. Popatlnl & Co. for snlo and the remaining bags on 12th July.
LOUD SOMERVELL OF HARROW—Abdul Hamid v. Odhavji Anandji 507
Tho bags worn sold under 13 contracts, one for three bags in April andtlio rust in July, August and September.
Tho plaint was filed on 16th May, 1040, tho respondents claimingdamages for wrongful refusal to take delivery of tho documents or goods.•Special damage was alleged as follows :—
'I ho plaintiff with due notice to the defendants sold the said goodsat their risk by private treaty at the then available market rato forIts. 5,600-12. In this connection tho plaintiff incurred expensesamounting to Rs. 1,000.
By the said refusal, neglect or breach of contract aforesaid, thedefendants have caused plaintiff loss or damago in the sum ofRs. 37,525, to wit :—Rs. 36,325 being difference between tho saidRs. 41,934-12 and Rs. 5,609-12 and the said sum of Rs. 1,000 whichsaid sum of Rs. 37,325 or any part thereof the defendants have failodand neglected to pay though thereto often demanded.
The sum of Rs. 41,934-12 is the equivalent of the contract price.
The defence was that the goods shipped did not correspond to thesample and were not merchantable. The defences failed and the learnedJudge awurded the damages as claimed. The appellants appealed takingthe point now taken before the Board namely that the damages wereexcessive. The appeal failed.
J?lie provisions as to damages for wrongful refusal to accept goods arecontained in section 49 of the Ceylon Sale of Goods Ordinance and aretho same as those in section 51 of the Sale of Goods Act, 1893 :—
49.—(1) Whore the buyer wrongfully neglects or refuses to acceptand pay for the goods, the seller may maintain an action againsthim for «lamages for non-acceptance.
The measure of damages is the estimated loss directly andnaturally resulting, in the ordinary course of events, from tho buyer’sbroach of contract.
Whore there is an available market for the goods in questiontho inoasuro of damages is prima facie to be ascertained by thedifference between tho contract price and tho market or current priceat tlio timo or times when the goods ought to have been accepted, or,if no timo was fixed for acceptance, then at tho timo of tho refusalto accept.
Sub-section 3 is of course a prima facie application of the principle laiddown in sub section 2. If there is no market price within sub section 3then the prima facie measure is the difforonce between tho contractprico and the value at the date of the breach. If the rejected goods couldbe sold at the time or times referred to in sub-section 3 then it may well boacademic to consider whether there was a market price within sub-section 3. The realisable price whether 11 market ” or not will give thefigure to he subtracted from the contract price. There are cases, ofwhich it is said by the respondents this is one, in which the goods in
608 LORD SOMERVELL OF HARROW—Hamid v. Odharji Anandji
question could not (reasonably) be sold at the date of the breach, lusuch cases the amounts realised, later, if reasonable steps are taken, willbe the best measure of their value at the relevant date.
At the trial tho appellants maintained that the sample referred to in thecontract, was one of white cowpeas.
Tho respondents disputed this and tho learned trial Judge acceptedthe respondents’ evidence that the contract was for brown cried cowpcits.a somewhat inferior commodity. .
It was submitted for the appellants first that there was an availablemarket for the GO tons of brown cowpeas on or about the 4th Februaryand a market price within sub-section 3. Alternatively it was submittedthat the sellers acting reasonably could have realised tho goods earlierat hotter prices. The learned Judge awarded tho damages as claimedwithout discussing these points. One explanation may be that they were .not sufficiently taken. The appellants called somo evidence and askedsome questions as to prices in February and March. The appellantswere of courso defending on merits and may not have omphasisod argu-ments which would only become relevant if they lost the case. TheirLordships however agree with the Supreme Court in holding that thepointB should be regarded as open on appeal.
In their Lordships’ view on the evidence it would be impossible to holdthat there was an available market within sub-section 3 for 60 tons ofbrown cowpeas at the time of the appellants’ refusal to accept. Thealternative submission requires a consideration in a little detail of suchevidence as there is. It is common ground that these cowpeas are liable tobe attacked by weevils after two or three months and of course deteriorate.There waB therefore every motive for the bank and those acting for thesellers to see that the goods were Bold as soon as buyers could be found.
Once the goods were in the hands of Popatlal tho evidence is clear.Their representative said that he sold at the highest possible price. Thodelay from April to July was due to the fact that there wore no buyersearlier. The same witness said that in December and January largequantities of this and other grains had arrived. The demand thereforefell off. If no buyers for these brown cowpeas could be found in April,May and June, it seems probable on his evidence that there would havebeen no buyers in March and February. Owing to congestion, landingwas slow and there was some confusion in the warehouses.
Tho defendants called some evidence as to sales in March. These weresales of comparatively small quantities to retailers. Most of the evidencedealt with white cowpeas and therefore does not assist. The evidence ifaccepted is not strong and one of the defendants’ witnesses said therewas no good price between January and March. The Supreme Courtreferred to the fact that the appellants had admittedly taken deliveryfrom the “June Crest ” of 25 tons of cowpeas of the same description. Iftheir case was that the respondents could have obtained higher priceswhy did they not prove how much they had realised for this smaller^quantity?
£ The fact that there are no clear findings or evidence as to the courseof events in February and March is doe to the failure of the defendantsmake dear or emphasise the case they now seek to make. They were
SANSON! J.—Sinnathurai v. Sub-Inspector oj Police, Vacuniya
invited to for nulate issues but failed to do so on any .of the points nowraised. There would seem to have been no clear Grass-examinationon the question why no bags were handed over to the selling agents beforethe beginning of April. The onus ia of course on a plaintiff to proverecoverable special damage. The respondents here called a representa-tive of their firm, of the bank, of the bank’s clearing agents and of theselling agent*.. They were clearly making the case that they had actedreasonably, had got the best prices and that therefore the net proceedsrepresented tho value of the goods. Taking the evidence as a wholotheir Lordships agree with the Supreme Court in holding that the claimwas made out.
Their Lordships will humbly advise Her Majesty- that the appeal bodismissed. The appellants must pay the costs of the appeal.
ABDUL HAMID et al , Appellants, and ODHIVJI ANANDJI & CO. LTD , Respondents
J.OltD SOMEKVKLL OK HARROW—Abdul Hamid v. Odhavji Anandji 505