WUEYEWAKDENE J.—Uttumchand & Co., Ltd., v. Times of Ceylon. 179
1939Present: Wijeyewardene J.
UTTUMCHAND & CO., LTD., Appellant, and THE TIMESOF CEYLON CO., LTD., Respondent.
87—C. R. Colombo, 44,881.
Contract—Contract for inserting advertisements in newspaper for a fixed period
—Termination before expiration of period—Damages recoverable.
The defendant contracted with the plaintiff company for the insertionof some of his advertisements twice a week in a newspaper owned by theplaintiff company.
Under the contract it was agreed that space should be reserved inthe newspaper at a fixed rate for a period of two months and that if theadvertiser failed to utilize the entire space contracted for within thespecified period it should be competent for the plaintiff company tocharge, at their discretion, “ either for the total space contracted forat the contract rate or for the space utilized at the non-contract rate.”
The defendant terminated the contract without just cause before theexpiration of the specified period and after the insertion of only threeadvertisements.
Held, that the defendant was liable to pay at the casual rate, and notat the contract rate, in respect of th.e three advertisements.
^^FPEAL from a judgment of the Commissioner of Requests, Colombo.
J. R. Jayewardene, for the defendant, appellant.
E. F. N. Gratiaen, for the plaintiff, respondent.
Cur. adv. vult.
September 7, 1939. Wijeyewardene J.—
This is an action arising out of a contract made by the defendantwith the plaintiff company for the insertion of some of his advertisementsin an evening paper called the Times of Ceylon owned by the plaintiffcompany. Under the contract, it was agreed that the defendant shouldpay Rs. 2.50 per single column inch for the reservation of a space of sixinches single column for an advertisement to appear in Wednesday andFriday issues of the newspaper for a period of two months commencingfrom June 1, 1938. The contract was made subject expressly to anumber of conditions three of which were as follows : —
Condition 3.—“ All space contracted for will become due for paymentin full accordance with the terms set out below and will bedefinitely reserved for the advertiser, whether used or unused,in which latter case the space may, at the discretion of theTimes of Ceylon Co., Ltd., be filled with any other matter
180 WIJEYEWARDENE J.—Uttumchand & Co., Ltd., v. Times of Ceylon.
Conaiiion 4.—" When the advertiser fails to utilize the entire spacecontracted for within the ^period specified in the contract, itshall be competent for the Times of Ceylon Co., Ltd., to charge,at their discretion, either for the total space contracted for atthe contract rate or for the space utilized at the non-contractrate ”.
Condition 7.—“ Change of ‘ c^pv ’ to be allowed as often as desiredbut advertisement ‘ copy ’ must reach this office two cleardays before the due date of insertion, failing which the previouscopy will be reproduced. If any advertisement cannot be setin the type or style requested, the setting shall be such as, inthe opinion of the Times of Ceylon Co. Ltd., most nearlycorrespond thereto and the advertisement will be insertedwithout submission of proof unless a proof is requested on theface of the advertisement ‘ copy
The plaintiff company published advertisements on account of thedefendant in their issues of June 1, 3 and 8 of the Times of Ceylon butdiscontinued any further publication in view of the defendant’s letter P8.
Giving credit to the defendant for a sum of Rs. 45 paid by him, theplaintiff company sued the defendant in this case for a sum of Rs. 135alleging liability on the part of the defendant to pay at the casual rateof Rs. 10 per single column inch for the three advertisements publishedby them.
The defendant denied his liability : —
to pay for the advertisement published on June 3 and 8, and
to pay at casual rates in respect of any of the advertisements.
He claimed, in reconvention, a sum of Rs. 30 on the footingthat he was liable to pay only for the first advertisementandthe
amount payable was only Rs. 15 atthe contract rate ofRs.2.50
per column inch.
The defendant sent the plaintiff company the advertisement D1 whichwas duly published in the issue of June 1. On the morning of June 3,the defendant sent a new advertisement P3 in place of Dl. The plaintiffcompany, however, published not the new advertisement P3 but the oldadvertisement Dl in their issue of June 3. The defendant, thereupon,wrote P8, stating that he “ cancelled ” the contract as the plaintiffcompany wrongfully failed to publishthe advertisementP3on
June3. This letter reached the plaintiffcompany on June8.The
new advertisement P3 appeared in the issue of June 8.
The defendant denied the liability to pay for the advertisements onJune 3 and 8 on the grounds :— ,
that the plaintiff company should have published P3 and not Dl
in their issue of June 3.
(b) that the plaintiff company should not have published P3 in theirissue of June 8, in view of his letter P8.
The defendant ignores the clear provisions of condition 7 of the contractin putting forward this contention. Moreover, the plaintiff companyhas led evidence to show why it was not possible for them to substitute
WUEYEWARDENE J.—Uttumchand & Co., Ltd., v. Times of Ceylon. 181
F3 for D1 on June 3, and to withdraw P3 from the issue of June 8 at.short notice. That evidence stands uncontradicted and has beenaccepted by the Commissioner of Requests. I hold, therefore, thatthe defendant fails in his plea that he is not liable to pay for theadvertisements on June 3 and June 8.
There remains the further question to be considered whether thedefendant is liable to pay at the casual rate as claimed by the plaintiffcompany. The defendant wrote P8 “ cancelling ” the contract on the-ground that the plaintiff company acted wrongfully in failing to insertthe advertisement P3 in their issue of June 3. This is an untenableposition as the action of the plaintiff company is justified by condition 7of the contract and, therefore, the defendant had.no right to terminatethe contract. The plaintiff company wrote P9 intimating that the:contract could stand cancelled but that the defendant would have topay at the casual rate under condition 4 of the contract.
It will be noted that if condition 4 is applicable to the present case, itwas competent for the plaintiff company to charge the defendant Rs. 270on the basis that the defendant had become liable to pay at the contractrate for the whole space contracted for. The plaintiff company has.chosen to charge the defendant only Rs. 180 on the footing that paymentshould be made at the casual rate for the actual space utilized by thedefendant. It will thus be seen that in making the present claim theplaintiff company has exercised the discretion given to them by condition.4 in favour of the defendant. I may add also that the Commissionerof Requests has found that the defendant was well aware of the casualrate at the time he entered into the contract and I am unable to say that,the Commissioner’s finding is erroneous.
The defendant’s Counsel urges that the plaintiff’s claim is in thenature of a penalty and relies strongly on a decision of this Court inWijewardene v. Noorbhai The plaintiff in that case, a newspaper'proprietor, sued the defendant on a contract whereby the plaintiff was-to publish advertisements of the theatre owned by the defendant for aperiod of one year from May 28, 1924, at a rate set out in the contract..The contract provided that in the event of its being terminated beforethe expiration of the contract period through any fault of the defendantthe plaintiff should be at liberty to charge for all the advertisementspublished under the contract at the usual rates which should not exceedRs. 2.50 per inch. About the end of January, 1925, the defendanttransferred his theatre to one Fernando. He discontinued from February3, 1925, the advertisements in the newspaper and paid the plaintiff atcontract rates for the advertisements sent by him. Fernando himself,however, entered into a contract with the plaintiff to advertise thetheatre in the plaintiff’s newspaper for a period of three months which,in fact, formed part of the twelve months during which the defendant’s-contract was to run. The plaintiff sued the defendant charging him atKs. 2.50 per column inch for the advertisements, from May 28, 1924, to>February 3, 1925. It was held by this Court that the plaintiff’s claim;
1 (1927) 28 N. L. R. 430.
182 WIJEYEWARDENE J.—Uttumchand & Co., Ltd., v. Times of Ceylon.
was in the nature of a penalty, and that the plaintiff was not entitled toget more from the defendant than he would have received had defendantduly completed the contract. The District Judge was directed toassess the plaintiff’s claim on the basis : —
that the defendant was liable to pay at the contract rates for the
days during which there were no advertisements from thedefendant or Fernando.
that the defendant must make good the loss incurred by the
plaintiff owing to the fact that Fernando’s contract providedfor a lower rate of payment than the defendant’s contract.
.Now, in the present case, there is evidence to show that right throughthe contract period of two months the space contracted for remainedreserved for the defendant. Therefore even if the defendant’s plea isupheld, the plaintiff could claim on the basis of assessment as adopted inWijewardene v. Noorbhai (supra) a sum of Rs. 225 as that would be theamount the defendant would have had to pay at the contract rate for theperiod during which no advertisement appeared in the Times of Ceylon.
There is, however, a later decision of this Court in The AssociatedNewspapers of Ceylon, Ltd. v. Hendrick1 where Macdonell C.J. andFoyser J. took the view that the provisions for the payment of a higherrate in a contract between a newspaper proprietor and an advertiser, inthe event of the advertiser failing to utilize the entire space contractedfor, should be regarded as an agreement to pay liquidated damages andnot as penalty. With reference to the earlier case of Wijewardene v.Noorbhai (supra) Macdonell C.J. said : —
“ 1 think, however, that the case can easily be distinguished on thefacts. There the contract stated that if advertisements totalling asmaller space were sent in by the defendant within the time givenhim, then the newspaper was to be entitled to charge for all advertise-ments published under the contract at the casual rates which shouldnot exceed Rs. 2.50 per column inch. In other words, the amountwhich the plaintiff newspaper could charge under that contract wasnot a fixed and ascertained sum. It was left to it to charge what itpleased provided the sum charged did not exceed Rs. 2.50 per inch•column ”.
In spite of the distinction drawn by the learned Chief Justice betweenthe two cases I find it difficult to say that the principles underlying thetwo decisions are not somewhat irreconcilable. But it is not necessaryfor the purposes of this case to decide which of the two decisions shouldtoe followed, as neither decision will help the defendant to reduce the claimmade by the plaintiff in this case.
I would, therefore, dismiss the appeal with costs.
(1935) 37 N. L. R. 104.
UTTUMCHAND & CO,LTD., Appellant, and THE TIMES OF CEYLON CO , LTD., Respondent