Budaka Ginners Limited v Hathi (Civil Appeal No. 51 of 1955) [1950] EACA 65 (1 January 1950)

## H. M. COURT OF APPEAL FOR EASTERN AFRICA

Before SIR NEWNHAM WORLEY (President), BRIGGS (Acting Vice-President) and BACON, Justice of Appeal

## BUDAKA GINNERS LIMITED, Appellant (Original Plaintiff) $\mathbf{v}$

## MAGANLAL KALIDAS HATHI, Respondent (Original Defendant) Civil Appeal No. 51 of 1955

(Appeal from the decision of H. M. High Court of Uganda, Jeffreys Jones, Ag. J.)

Contract—Loss—Action to minimize—Offer before action tantamount to tender— Costs—Discretion exercised on false premises—Sale of Goods Ordinance (Cap. 213 of the Laws of Uganda, 1954), sections 16 and 36.

This appeal arose out of proceedings taken by the appellant to recover the balance of purchase money for two parcels of groundnuts sold to the respondent. The groundnuts were resold and the sub-buyers refused to accept them on the ground that they were not of merchantable quality. Ultimately the matter went to arbitration and the goods were disposed of to the sub-buyer at a reduced price. The defendant paid after the proceedings were commenced a figure representing the difference between the claim and the counter-claim. In the proceedings the respondent had counter-claimed for the loss he had sustained and the High Court gave judgment for the plaintiff for the amount claimed and judgment for the defendant on the counter-claim which included the expenses incurred in the arbitration. The appellant's claim for interest on the amount due was disallowed. Costs were awarded to the defendant. Nowhere in the judgment did the trial Judge consider the plaintiff's right to have judgment entered in its favour for the balance found due to it but on the contrary said, "I give judgment for the defendant". This oversight—no doubt due to the fact that the contest at the trial was on the counter-claim alone—was doubtless the cause of his giving all the costs to the respondent.

Held (21-1-56).-(1) The action of the respondent was the best he could do in the circumstances and there was no evidence that either the sub-buyers or another buyer could have been persuaded to pay any greater sum than the respondent eventually received and accordingly the full amount of the loss should be allowed.

(2) In commercial cases such as this where a genuine offer of payment has been made before action, as had happened in the instant case, the offer should for the purpose of<br>exercising the discretionary power as to allowing a claim for interest, be treated as tantamount to tender.

(3) The discretion as to costs must be said to have been exercised on false premises.

Appeal allowed in part. Half the defendant's costs of the High Court proceedings to be paid by the plaintiff. Respondent to have the costs of the appeal.

No cases.

J. M. Shah for appellant.

Da Silva for respondent.

*Note.*—Only the relevant portion of the judgment is set out.

$B_{ACON}$ , J. A.—I therefore pass to consider the measure of damages in terms of money. The principal item claimed by the respondent is the sum of Sh. 7,270/62, being the amount by which the price which he was to get from

Ralli Bros. under his contract with them was diminished. On the footing that the description of the goods in each of the contracts in question was in substance the same—and there is no evidence upon which one can for present purposes distinguish one description from the other-the respondent's loss on his contract with Ralli Bros. must be taken to be the true criterion, assuming that such loss was the least which he was obliged, in the circumstances, to suffer. I see no reason for holding on any of the evidence in the record that the respondent could have done better than he did. He may perhaps have been fortunate in seeing the matter go to arbitration and in having the goods accepted by Ralli Bros. at all. However that may be, there is nothing to indicate that either Ralli Bros, or any other buyer could have been persuaded to pay any greater sum for the goods than the respondent eventually received. Accordingly, I would allow the full amount of that sum as claimed.

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The next matter is a group of items, placed under the general heading "Cost" of the Arbitration" in the judgment of the Court below. In this group are included brokerage, legal representation, telegrams and telephones, arbitration fees and<br>travelling expenses and accommodation. In the light of the reduced figures allowed by the learned trial Judge, particularly as regards the claim for travelling expenses and accommodation, I see no reason to differ from him; the figures are based upon the respondent's own evidence of his expenditure and I am satisfied that the whole of the claim allowed under this heading at the trial was properly allowed. It might possibly have been otherwise had the appellant, as plaintiff at the trial, made any serious attempt to whittle them down, but no such attempt was made. This group of items amounts to Sh. 3,466/36.

There is, however, one item which was in my opinion wrongly allowed by the learned trial Judge, namely the sum of Sh, 630 under the heading "Loss of Profit on the Transaction". This figure was erroneously included because in the figure Sh. 7,270/62 there was already included the whole of the profit which the respondent would have made on his resale to Ralli Bros, if the goods had come up to description.

Accordingly, the amount of damages to which I find the respondent to be entitled is the sum of Sh. $10,736/98$ .

There is one other matter to which I must refer. In the memorandum of appeal the question of the interest claimed by the plaintiff-appellant is again raised, this claim having been disallowed in his discretion by the learned trial Judge. The appellant contends that it should be allowed because there was no actual tender to him before action of the sum of Sh. 20,04/02. In point of fact the respondent offered to pay this sum to the appellant before the date of the plaint, although the sum itself or a cheque representing it was not tendered. I think, however, that particularly in commercial cases such as this a genuine offer of payment before action should for the purpose of the exercise of the discretionary power as to allowing a claim for interest be treated as tantamount to tender. I therefore see no ground for saying that the learned trial Judge exercised his discretion wrongly in this instance.

Accordingly, I would allow the appeal in part, namely to the extent of reducing by Sh. 630 the amount of the respondent's counter-claim which is to be set off against the appellant's claim. It is to be noted that this item of Sh. 630 formed no part of the counter-claim as pleaded by the respondent; nor does it appear from the learned Judge's note that counsel ever attempted to have it allowed in the respondent's favour; it seems to have been inadvertently included by the learned Judge himself in the calculation incorporated in his judgment.

As regards that part of the decree which deals with costs, it appears that the incidence should not have fallen entirely on the appellant company which as plaintiff succeeded in showing that a balance remained due from the respondent. In giving to the respondent the whole of his costs of the suit the learned Judge had evidently overlooked the appellant-plaintiff's right to have judgment entered in its favour for that balance, since nowhere in the judgment as delivered did he say so but, on the contrary, he did say "I give judgment, therefore, for the defendant". This oversight—no doubt due to the fact that the contest at the trial was on the counter-claim alone-----------------------------------the costs to the respondent. In those circumstances the discretion as to costs must be said to have been exerciesd on false premises.

I would, therefore, vary the decree of the High Court by substituting the figure of Sh. 10,736/98 for the figure Sh. 11,366/98, by consequentially amending the other figures and by providing that half the defendant's costs of the suit<br>be paid by the plaintiff. I would also give to the respondent his costs of the appeal, since he has succeeded on all points except the one on which he himself never relied.

WORLEY, President.—I agree and do not wish to add anything. An order will be made in the terms proposed.

BRIGGS, Acting Vice-President.—I agree.