David da Co. v. Beneviratne.
1946Present: Howard C.J. and do Silva J.DAVID & CO., Appellant, and SENEVIRATNE et al.,Respondents.
217—D. C. Negombo, 13,031.
Damages—Breach of contract—Special loss, to be recoverable, should be matterof express terms.
Upon a breach of contract any loss resulting from special circumstancescan be recovered only if the special circumstances were communicatedat the time of the contract to the party from whom it is afterwardssought to recover damages.
Semble, that the rule as to the remoteness of damage is the samewhether the damages are claimed in actions of contract or tort.
PPEAL from a judgment of the District Judge of Negombo. Certainparts of an oil engine were entrusted by the defendants to the
plaintiff to effect repairs. The plaintiff was not at the time informedwhether these parts were part of an engine in use. Nor was any dategiven for the completion of the work although later he was informedthat the engine was required for working on a particular day. Further,the plaintiff was not informed of any special loss that would be incurredby the defendants if the engine was not repaired by a particular date.When the plaintiff sued the defendants for the cost of repairs the trialJudge dismissed his claim and, as regards the claim in reconventionmade by the defendants, awarded the defendants a sum of Rs. 1,500as damages on the ground that, owing to the plaintiff’s bad work anddelay, the defendants could not work their mills. One of the grounds ofappeal was that the learned District Judge was wrong in awarding thesum of Rs. 1,500 as damages as they were too remote.
Zr. A. Rajapahse, K.C. (with him J. M. Jayamanne and T. B.Dissanayake), for the plaintiff, appellant.—The claim of the defendantsin reconvention is for a breach of the contract to repair the parts of theoil engine. Damages for such breach should be the ordinary and naturalresult of the breach, viz., the additional expenditure incurred by himin getting the engine repaired by a competent third parly. Only intrinsiodamages or the direct pecuniary loss which the breach entails will beallowed—Maasdorp’s Institutes of S. African Law, Vol. 3, p. 171 (4th ed.) ;Pothier’s Obligations p. 91 (Vol. 1, Oh. 2, Art. 3).
The claim of Rs. 1,500 for loss of profits" for the non-user of the engineis remote damages. Such damages, as they were the result of specialeiroumstancos which were not communicated to the plaintiff at the timeof the contract, cannot be awarded—Hadley v. Baxendale 1; 10 Hailshampp. 97—98, 103—104 ; Nathan’s Law of Damages in S. Africa (1930 ed.),pp. 23-24.
Moreover, the defendants have not proved that they had any contractsor work to do and that they incurred loss by not performing them. SeeSunley & Co. v. Cunard White Star, Ltd.2
1 (1864) 9 Exch. 341.1 L. R. (1939) 2 K. B. 791.
H 16792 <8/68)
HOWARD C,«T.—David «fc Co. v. Seneviratne.
N. Nadarajah, K.C. (with him 8. E. J. Fernando), for the defendants,respondents.—The defendants’ claim in reconvention is based rather ontort than on contract. Hadley v. Baxendale (supra) applies to breach ofcontract only. Sometimes the dividing line between contract and tortis very fine. In the oase of a tort all damages directly flowing from theact complained of may be claimed. In the case of H. M. 8. London 1compensation was given for the loss of the use of the vessel during thewhole period of delay caused by a strike of workmen, inasmuch as theloss was “ directly and immediately due to the defendants’ negligence”.
Atwnrrimg the cause of action to be based on a breach of contract,Hadley v. Baxendale can be distinguished 'on the ground that thespecial circumstances in the present oase were communicated by thedefendants to the plaintiff.
L. A. Bajapakse, K.C., replied.
Cur. adv. vuU.
February 21, 1946. Howard O.J.—
In this case the plaintiff claimed a sum of Be. 760, the cost of certainrepairs to an oil engine belonging to the defendants. The defendantsin reconvention claimed sums of Rs. 129 and Rs. 1,500. The DistrictCourt dismissed the plaintiff’s action and entered judgment for thedefendants in a sum of Rs. 1,530 ‘69 with costs. So far as this appeal isconcerned the only question that arises is whether the learned DistrictJudge was right in awarding a sum of Rs. 1,500 as damages, becauseowing to plaintiff’s bad work and delay they could not work their mills.It would appear that certain parts of the oil engine at the defendants’mills had become wasted and so they consulted Mr. Dronan, an Engineerand Manager of the Hunupitiya Mills. Mr. Dronan was unable to do thework and rocommended the plaintiff. In a letter dated February 24,1943 (P 1), the plaintiff agreed to do the repairs specified therein. Byletter of February 26, 1943 (P 2), Rs. 375 was paid by the defendants inadvance for these repairs. On March 31, 1943, the plaintiff informed thedefendants (D 2) that owing to a break-down in their workshop ho couldnot yet finish the repairs to the engine. In reply to this by D 3 datedApril 14, 1943, the defendants asked the plaintiff to hurry up with therepairs as the engine was required for the working of the factory on May1, 1943. All the parts handed over to the plaintiff to be repaired hadbeen returned and the plaintiff’s workmen remained on the defendants’premises from May 24 to June 2,1943, trying to get the machine to work.The workmen failed as also did the plaintiff who tried on May 28, 1943.On Juno 10, 1943, the defendants by D 9 informed the plaintiff that therepairs had not been completed and they had entrusted the work toMr. Dronan. They also stated that cost of these repairs would be debitedto the plaintiff and thoy were put to further loss by tho non-completionof the work.
In paragraph (12) of their answer tho defendants state that inconsequence of delay in getting the engine into working order and inobtaining tho completed parts of the engine and in tho loss of use of thesaid engino through tho broach of contract of tho plaintiff a loss of
* L. R. 1914 P. D. 72.
HOWARD C.J.—David <b Co. v. Seneviratne.
Rs. 2,500 has accrued to the defendants, but they restrict their claim toRe. 1,500. The learned Judge held that the defendants are entitled tothis sum as damages in view of the fact that the second defendant hasstated in evidence that the engine can make 4 tons of oil a day and thatthe profit would bo Rs. 100 a day. It has been contended by Counselfor the plaintiff—the appellant—that the learned Judge was wrong inawarding this sum as damages as they are too remote. The principleon which damages are awarded for breach of contract is stated inHalsbury’s laws of England Vol. 10, p. 97 as follows :—
“ Upon a breach of contract such damages are to be awarded asmay reasonably be supposed to have been in the contemplation ofboth parties when they made the contract as the probable result ofthe breach of it. Therefore where there are special circumstancesand these circumstances are communicated at the time of the contractto the party from whom it is afterwards sought to recover damagesand accepted by him as the basis on which the contract is made, thedamages reasonably contemplated axe such as would ordinarily followfrom a breach of contract in these special circumstances. If thespecial circumstances were unknown to the party breaking the contract,he can only be taken to contemplate the amount of injury which wouldarise generally from the breach in cases not affected by speoialcircumstances. It is not enough that the party whom it is subsequentlysought to make liable should be informed that a breach will resultin particular loss. He must be informed of the special circumstancesin which the loss will be incurred, and must enter into the contractsubject to them. The information must be given at the time ofentering into the contract. Information given at a later date, whetherof oiroumstanoes which were contemplated by the party giving suchinformation at the date of the contract or of circumstances whicharose at a later date will not suffice”.
The leading ease on the subject is Hadley v. JBaxendale 1. In that casethe plaintiffs, the owners of a flour mill, sent a broken iron shaft to theoffice of the defendants, who were common carriers, to be conveyed bythem and the defendants’ clerk was told that the mill was stopped,that the shaft must be delivered immediately and that a special entry,if necessary, must be made to hasten its delivery. And the deliveryof the broken shaft to the consignee, to whom it had boon sent by theplaintiffs as a pattern, by which to make a new shaft, was dolayed for anunreasonable time in consequence of which the plaintiffs did not receivethe new shaft for some days after the time they ought to have received itand they were consequently unable to work their mill fox want of thenew shaft and thereby incurred a loss of profit. It was held thatthese circumstances not having been communicated by the plaintiff tothe defendants such loss could not be recovered in an action againstthe defendants as common carriers.
Applying the principle formulated in Hadley v. Baxendale whichis also the Roman-Dutch law (vide Nathan’s Law of Damage inSouth Africa, pp. 21 and 22) to the facts of the present case, it would
(1334) 0 Exch. 341.
HOWARD C.J.—David ds Co. v. Seneviratne.
appear from the letterB exchanged between the parties that certain partsof the oil engine were entrusted to the plaintiff to effeot repairs. Theplaintiff was not at the time informed whether those parts were part of anengine in use. Nor was any date given for the completion of the workalthough later, on April 14, he was informed that the engine was requiredfor working on May 1. Nor was the plaintiff informed of any specialcontracts that would be lost if the engine was not repaired by a particulardate. The circumstances do not show that the profits of the mill must bestopped by an unreasonable delay in the completion of the repairs.Another engine might have been working at the time. The specialcircumstances were not communicated to the plaintiff by the defendants.
It has been argued by Counsel for the respondents that the plaintiffhas not only been guilty of breach of contract, but has also been negligentand committed a tortious act. In such circumstances it is maintainedthat the measure of damages that may be awarded is calculated on adifferent principle to that laid down in Hadley v. Baxendale.
With regard to this contention it is manifest from a perusal pi thedefendants’ answer and particularly paragraph (12) that the defendantsfounded their claim for Its. 1,500 on breach of contract. There was nosuggestion in the answer that the plaintiff had committed a tortious act.Our attention was invited by Counsel for the respondents to H. M. S.London (1914) P. £>. 72. But I observe that in his judgment in that caseSir Samuel Evans stated that it was settled law that the rule as to theremoteness of damage is the same whether the damages are claimed inactions of contract or tort and referred to the case of The Hotting Hid(1884) 9 P. D. 105 at p. 113. In H. M. S- London damages were awardedfor loss of the use of the vessel whilst, she was in dry dock for repairsresulting from a collision caused by the negligence of the defendants.Sir Samuel Evans in his judgment cited with approval extracts from thejudgments of the Court of Appeal and House of Lords in the case ofThe Argentino reported in 13 P. D. p. 201 and 14 A. C. 519. From thoseextracts it would appear that both Courts took the view that in the caseof an innocent ship disabled by an accident the consequence of the. offending vessel’s tort is that the owner of the innocent vessel loses for atime the use which he would have otherwise had of his vessel. Such lossof use is the direct and natural consequence of the collision and thereforerecoverable as damages. In my opinion, therefore, there is nothinginconsistent in the cases of H. M. 8. London and The Argentino which dealwith damages awarded to the owners of innocent vessels damaged incollisions and the principle laid down in Hadley v. Baxendale (supra).
For the reasons I have given the damages of Rs. 1,500 awarded for lessof profits cannot be allowed to stand. This part of the judgment of theDistrict Court is set aside and judgment must be entered for the respond-ents foT Rs. 30‘69 in place of Rs. 1,530 69. As the appellant has onlypartially succeeded in his appeal he will be allowed half the costs of theappeal to this Court.
DE Silva J.—I agree.
Appeal partly allowed.