COOPER MOTORS CORPORATION (T) LTD v ARUSHA INTERNATIONAL CONFERENCE CENTRE 1991 TLR 165 (CA)

COOPER MOTORS CORPORATION (T) LTD v ARUSHA INTERNATIONAL CONFERENCE CENTRE 1991 TLR 165 (CA)

Court Court of Appeal of Tanzania - Arusha

Judge Kisanga JJA, Omar JJA, and Mnzavas JJA

29 October, 1991 B

Flynote

Contract - Bailment - Extent of bailee's duty - S. 103 Law of Contract Ordinance, Cap.

433.

Contract - Exemption clause - Fundamental breach - Whether an exemption clause

can avail a contract breaker where he C has committed fundamental breach.

Contract - Damages - Special damages - Whether court may award more damages

than pleaded.

-Headnote

In a suit for damages arising out of breach of contract the trial judge found that the

appellants had committed D fundamental breach of their contract of bailment and

thus they were not availed of the protection of the exemption clause imbedded in the

contract. The trial judge also awarded the respondents special damages grossly in

excess of the special damages claimed. On appeal the justices of appeal upheld the trial

judge's decision but quashed the E award of special damages.

Held: (i) Under section 103 of the Law of Contract Ordinance a bailee of a chattel has

duty to take as much care of the chattel as a person of ordinary prudence would do in

respect of his own goods. F

(ii) the failure by the appellants to exercise duty of care in respect of the motor

vehicle to them for repairs went counter to the clear statutory provisions of section

103 of the Law of Contract Act, Cap. 433.

(iii) the theft of the engine and gearbox was a breach on the part of the

appellants which went to the root of G the contract; and as such the exemption

clause could not be relied on;

(iv) it was wrong for the trial judge to award special damages which were

more than what the respondent had claimed. H

Case Information

Order accordingly.

[zJDz]Judgment

Mnzavas, Kisanga and Omar, JJ.A.: In this appeal the present respondent, Arusha

International Conference Centre, filed a suit in the High Court, (Chua, J.), against the

present appellant, Cooper Motor Corporation (T) Ltd., I seeking for an order that the

appellant/

1991 TLR p166

MNZAVAS, KISANGA AND OMAR JJA

A defendant returns to him his (respondent's) motor vehicle in good condition and

repair. The respondent/plaintiff also claimed from the appellant/defendant total of

Shs. 166,000/=, as special damages and general damages for loss of use of his motor

vehicle to the tune of Shs. 90,000/=. The trial Court was also asked to grant any

further costs it B may deem fit to grant.

After a full trial the learned judge came to the conclusion that the respondent had

proved his claim against the appellant and accordingly ordered the appellant to pay

Shs. 1,018,969/30 as special damages, Shs. 90,000/= as C general damages and finally

ordered the appellant to fix a new engine and gearbox to respondent's motor vehicle.

The appellant was also to pay 9% interest on the amounts awarded from the time of

filing the suit to the time the whole amount was paid in full. Aggrieved by the

decision of the High Court the appellant is appealing to this Court.

D The following undisputed facts formed the basis of respondent's claim against the

appellant.

On the 7th of August 1981 the respondent/plaintiff delivered the motor vehicle

registration No. SU 13483, a Volkswagen Combi, to the appellant's garage in Arusha

for repairs in accordance with instructions as per exhibit P2 E dated 7/8/81 for a

consideration of Shs. 14,654/=. The appellant apparently repaired the motor vehicle

but as the motor vehicle was about to be delivered to the respondent who was ready

to pay for the repairs the appellant wrote F a letter - exhibit P1 dated 26/12/81 to the

respondent informing him as follows:

We are sorry to inform you that the engine and gearbox for your car quoted

above which was undergoing repairs in our workshop has been stolen.

G This was discovered in the morning of 28th September, 1981 and the matter

was reported to the Police who have been dealing with it since then.

Investigations are still going on after which we shall communicate to you.

H Meanwhile we shall appreciate if you would please provide us with the engine

number from the log book for onward transmission to the C.I.D.

I Yours faithfully,

For and on behalf of

The Cooper Motor Corp. (T) Ltd.

1991 TLR p167

MNZAVAS, KISANGA AND OMAR JJA

After this correspondence the appellant offered, without prejudice, to settle

respondent's claim out of Court and A offered to purchase the motor vehicle at its

market value at the time it was delivered for repair on 7/8/91 - exhibit P3 dated

21/1/87. A reminder regarding the offer was sent to the respondent by the appellant

on 14/5/82 as shown in exhibit P4. B

A counter offer was made to the appellant by the respondent who, by way of

mitigation of costs, afford to buy a new engine and gearbox for the motor vehicle

whose price would be submitted to the appellants for payment by invoice; and other

damages to be negotiated between the parties as per Exhibit P5 dated 24/3/83. This

counter offer C was not replied to by the appellant despite two other reminders as

shown in exhibits P6 and P7 dated 6/6/83 and 3/5/83 respectively. It was after this

that the respondent went to Court (as mentioned above) and subsequently the

appellant, being aggrieved by the judgment of the trial Court, decided to come to this

Court. D

Before us the appellant was represented by Mr. Kapoor and Mr. Desouza learned

Counsels. Mr. Kapoor conceded that there was a contract between the appellant and

the respondent whereby the former was to repair a motor vehicle of the later for an

agreed sum of money. Equally Mr. Kapoor admitted in his submission that the E

motor vehicle was delivered to the garage of the appellant and thereby making the

appellant a bailee of the motor vehicle. While the motor vehicle was in the possession

of the bailee, the appellant, its engine and gearbox were stolen. What this Court has

to decide is whether the appellant as a bailee of the motor vehicle would be

responsible F in law for the loss of the engine and the gearbox.

Mr. Kapoor vigorously argued that their client, the appellant, as a bailee of the chattel

exercised enough and reasonable care in protecting the property. He said to quote

him - "No one would have taken the engine and gearbox without being detected by

the guard. It is our contention that the motor vehicle was kept in a first class G

garage and not under a tree. The appellant's duty of care was no more than what he

did".

Secondly Mr. Kapoor submitted that over and above the argument that the appellant

had discharged his duty of care as a bailee under section 103 of the Law of Contract

Act, he was also protected from liability by the exemption H clause in the agreement

between the parties. It was the learned Counsel's submission that a contract can

include any exemption clause no matter how wide. In support of this argument we

were referred to the decisions in Kenyon I Ltd. v Baxter Hoare & Co. [1971] 2 All

E.R. 708 and Suisse Atlantique Société

1991 TLR p168

MNZAVAS, KISANGA AND OMAR JJA

A d'Armement Maritime S.A. v N.V. Rotterdamsche Kolen Centrale [1966] 2 All

E.R. 61. It was submitted that the decision in these two cases was that a contract can

even exclude a fundamental breach in its exemption clause. Mr. Kapoor, learned

Counsel submitted that their client, the appellant, was not a warehouse; that he had

B contracted to repair respondent's motor vehicle and not to warehouse it.

Coming to the quantum of damages awarded by the High Court it was submitted that

the respondent had claimed a maximum of Shs. 166,000/= special damages. That being

the claim Mr. Kapoor argued that the learned judge erred C in law in awarding

special damages to the respondent which were more than what the respondent had

pleaded. In support of this argument the Court was referred to the decision of this

Court in The Cooper Motor Corporation Ltd. v Moshi/Arusha Occupational Health

Services - Civil Appeal No. 1 of 1990. Finally Mr. Kapoor submitted D that even the

Shs. 166,000/= special damages claimed by the respondent had not been proved. To

fortify his argument we were referred to page 59 of the High Court judgment where

the learned judge noted that the plaintiff, E now the respondent, had shown how he

arrived at the figure of Shs. 166,000/= special damages.

The learned Counsel asked the Court to allow the appeal. In the alternative Mr.

Kapoor submitted in reply that in the event the Court found that there was a

fundamental breach on the part of the appellant the Court should look F into the

value of a gearbox and engine. To counter Mr. Kapoor's submission that the appellant

was not liable for the loss of the engine and the gearbox Mr. Umbulla, learned

Counsel for the respondent/plaintiff argued that the evidence showed that the

appellant instead of repairing the motor vehicle under the contract he vandalized it.

This, it was argued, went counter to the statutory provisions of section 103 of the Law

of Contract Act. Secondly it was G Mr. Umbulla's submission that it is now settled

law that exemption clauses will no apply where there is a fundamental breach. In

support of his argument we were referred to Anson's Law of Contract - 21st Ed. at

pages H 126 and 127. It was argued that exemption clauses cease to have effect

where the breach went to the root of the contract. It was submitted that in this case

the appellant, as a bailee, was required in law to take care of the respondent's motor

vehicle generally. In support of his argument the decision in Photo Production Ltd. v

I Securicor Transport Ltd. [1978]3 All ER 146 was quoted.

1991 TLR p169

MNZAVAS, KISANGA AND OMAR JJA

As for quantum of damages Mr. Umbulla submitted that special damages were

pleaded and that the sum of Shs. A 166,000/= claimed was up to 31/3/82. On the

question of general damages it was Mr. Umbulla's submission that their claim of Shs.

90,000/= as general damages was found to be reasonable by the High Court and asked

this court not to interfere. The learned counsel finally argued that this Court should

order that the respondent be compensated B for the loss of the engine and gearbox.

The Court was asked to dismiss the appeal with costs.

This is an interesting case and it has exercised our minds a great deal. We have

endeavoured to read all the C authorities quoted to us by learned counsel and we

have made our own research as to what should be the law where an exemption clause

is worded in wide terms which tend to make the contract itself absurd.

This situation arose in England in the case of J. Spurling v Bradshaw [1956]1 W.L.R.

461 where it was held inter alia: D

Exemption clauses are to be read as subject to a proviso that they only avail to

exempt a party when he is carrying out his contract, not when he is deviating from it

or is guilty of a breach which goes to the root of it. E

If this decision is anything to go by the facts in this case show that (to borrow Mr.

Umbulla's terminology) the appellant "vandalized the respondent's motor vehicle

instead of repairing it". This was clearly a breach that went to the root of the contract.

But, as already mentioned above, Mr. Kapoor argued that parties to a contract may

insert F exemption clauses in a contract which protect a party even where there is a

fundamental breach. The Suisse case (supra) quoted by Mr. Kapoor in support of his

contention was also referred to by Mr. Umbulla in support of the opposite view. G

We have carefully read the judgment in this case and it is our view that the decision

is more compatible with the argument advanced by Mr. Umbulla than that put

forward by Mr. Kapoor.

For example at page 68 the judgment of Pearson, L.J., in U.G.S. Finance Ltd. v

National Mortgage Bank of H Greece and National Bank of Greece, S.A. is quoted

where he said inter alia:

As to the question of fundamental breach I think there is a rule of construction

that normally an exception or exclusion clause or similar provision in a contract

should be construed as not applying to a situation created by a fundamental breach I

1991 TLR p170

MNZAVAS, KISANGA AND OMAR JJA

A of contract. This is not an independent rule of law imposed by the Court on

the parties willy-nilly in disregard of their contractual intention. On the contrary it is

a rule of construction based on the presumed intentions of the contracting parties. It

involves the implication of a term to give to the contract that business efficacy which

the parties as reasonable men must B have intended it to have. This rule of

construction is not new in principle but it has become prominent in recent years in

consequence of tendency to have standard forms of contract containing exception

clauses drawn in extravagantly wide C terms, which would produce absurd results if

applied literally.

In the same case at page 76 the Court said inter alia:

D Exemption clauses differ greatly in may respects. Probably the most

objectionable are found in complex standard conditions which are now so common.

In the ordinary way the customer has no time to read them, and if he did read them,

he would probably be told that he could take it or leave it. If he then went to another

supplier, the result would be the same. Freedom to E contract must surely imply

some choice or room for bargaining. At the other extreme is the case where parties

are bargaining on terms of equality and a stringent exemption clause is accepted for a

quid pro quo or other good reason; but this rule appears to treat all cases alike ... This

is a complex problem which intimately affect millions of people and it F appears to

me that its solution should be left to Parliament.

Again at page 78 the Court says inter alia:

G Sometimes it has been declared that where a fundamental breach had occurred

an exception clause could not as a matter of law be relied on, but the better view on

the authorities and that accepted by both sides before your lordships, is that, as a

matter of construction, normally an exception or exclusive clause or similar provision

in a contract should be construed as H not applying to a situation created by a

fundamental breach of contract.

That was a case decided in England and so decision is of persuasive value. Coming

back home we have section 103 I of the Law of Contract Act which deals with

bailment. It says:

1991 TLR p171

MNZAVAS, KISANGA AND OMAR JJA

In all cases of bailment the bailee is bound to take as much care of the goods

bailed to him as a person of ordinary A prudence would under similar circumstances

take care of his own goods of the same bulk, quantity and value of the goods bailed:

Provided nothing in this section shall be construed as applying to or qualifying the

liability at common law of a B common carrier or an in keeper.

In the present case it is not disputed that the appellant was a bailee of the motor

vehicle sent to him for repairs. As a bailee of the chattel the law required him to take

as much care of the chattel as a person of ordinary prudence would C do in respect

of his own goods. That the whole engine and its gearbox were dismantled from the

motor vehicle and stolen from appellant's garage tends to support Mr. Umbulla's

argument that the appellant failed to exercise duty of care in respect of the motor

vehicle entrusted to him for repair. This failure went counter to the clear D statutory

provisions of section 103 of the Law of Contract Act. Cap. 433.

As to the argument that the appellant was protected by the exemption clause which

said inter alia that "the appellant was expressly relieved of all liability for loss of or

damage to customers' goods and property however E caused" we are satisfied in our

own minds that the theft of the engine and the gearbox was a breach on the part of

the appellant which went to the root of the contract; and as such could not absolve

the appellant from liability. We would be setting a very dangerous precedent if we are

to hold that an exemption clause like the one relied upon by F the appellant could

protect a garage owner in whose garage vital parts of a motor vehicle sent there for

repairs are stolen. On the totality of the evidence we agree with the learned trial

judge that the appellant was liable for the loss of respondent's engine and gearbox.

The appeal is accordingly dismissed with costs in this Court and the High G Court.

On the question of damages it is amply clear that the respondent did not prove to the

Court how he incurred the special damages of Shs. 166,000/=. The respondent did not

produce even an invoice demanding payment let alone H a receipt to show that he

incurred expenses in hiring alternative transport after his motor vehicle had been

vandalized. That being the position and taking

into account the provisions of Order VII R.7 of the Civil Procedure Code that every

plaint shall specifically state the relief which the plaintiff claims, we have no

alternative but to disallow the claim of special damages. We should also I like to

mention to the learned trial

1991 TLR p172

A judge that it was wrong in law for him to award special damages which were

more than what the respondent/plaintiff had claimed. A party is only awarded

damages which he pleaded and proved by way of evidence. See C.A. Civil appeal No.

32 of 1988 - Arusha International Conference Centre v Edward Clemence.

B The claim of Shs. 90,000/= general damages for loss of use is upheld.

The motor vehicle, SU 13483, VW, COMBI to be returned to the respondent fitted

with a new engine and a new gearbox and in good mechanical condition and repair.

C If the appellant has effected repairs on the motor vehicle as per repair order -

Exhibit P2, repair charges as shown in exhibit P2 to be paid to him by the respondent.

D Order accordingly.

1991 TLR p172

E