MARCH 2015

General damages cannot be awarded for breach of contract: The case of British Airways v

Atoyebi1 reviewed by Gbenga Bello2

Introduction

In Nigeria, the principles for the assessment of the quantum of damages for breach of

contract is rooted deeply in the rule stated in the 19th Century English case of Hadley v

Baxendale3. The principle of law enunciated in this case is that damages in respect of breach

of contract should be as such that;

a. may fairly and reasonably either arising naturally i.e. according to the usual course

of things from such breach of contract itself, or

b. may reasonably be supposed to have been in the contemplation of both parties at the

time they made the contract, as the probable result of the breach of it.”

The doctrine has been applied in several cases by the Apex Court in Nigeria as a means of

restoring an innocent party claiming damages for a breach to the position he would have

been if the breach had not occurred. As a result, the assessment of damages is based purely

on damages flowing naturally from the breach.4 As it relates to claims for damages for

breach of contract therefore, the application of this principle unwittingly eliminates the

categorisation of heads of damages into special and general damages.5

One of the issues presented before the Nigerian Supreme Court in the case under review

was whether the Court of Appeal was right to have awarded general damages in a case

involving a breach of contract of carriage by air.

1 (2014) 13 NWLR (PT. 1424) 253. 2 Gbenga Bello is a Senior Associate at Adepetun Caxton-Martins Agbor & Segun (ACAS-LAW). 3 (1845) Exch. 341 4 Stephen Okongwu V NNPC (1989) 4 NWLR (Pt 115) 296 @ 306h-307a; G.F.K. Investment Ltd V Nigeria

Telecommunications Plc (2009) 15 NWLR (Pt 1164) 344; @ 384D-E

5 G.K.F. Investment Nigeria Ltd v NITEL Plc (2009) 15 NWLR (Pt. 1164) 344 @ 384C-E

The Facts:

The Respondent, a Senior Advocate of Nigeria (S.A.N)6 was a first - class passenger on board

the Appellant’s flight en-route London-Heathrow to Lagos on 8th May 2000. On arrival in

Lagos, one of the Respondent’s hand-luggage which was tagged and checked-in did not

arrive with the flight and was not delivered to him. During one of his series of visits to the

Appellant’s Lagos office at the Airport between 8th and 10th of May 2000, the Respondent

was informed that the bag has been found at the Heathrow Airport and would be sent to

Lagos. The Respondent sent an associate with written authorisation to collect the bag at

Heathrow, but the Appellant refused to hand the bag to the associate, necessitating the

Respondent to travel to London on the 10th of May 2000 for the sole purpose of collecting the

bag. The Respondent was met on arrival in London by the Appellant’s employee who went

to the large room containing bags belonging to Nigerians and the Respondent found his bag

intact.

The Respondent sought compensation for the manner he was treated and resultant losses

incurred by him. The Appellant offered to pay £508 in compensation. The Respondent was

dissatisfied with the offer and he sued the Appellant for each loss particularised as follows:

(a) Cost of one way First class ticket to Lagos of 7 May 2000 … … … US$1500;

(b) 2 return club class ticket to London of 10 May 2000 … … … US$3, 950;

(c) One Night Stay at a London Hotel … … … … … … £225;

(d) Taxi Costs (Airport, London etc.) for plaintiff/assistants … … … … … £115;

(e) Phones, Faxes to & from UK to Lagos … … … … … £73;

(f) Loss of professional time for traveling to the UK @ £150/hr … … £6600;

(g) Damages for stress and inconvenience of travelling … … … £100, 000.

After trial, the trial court granted all the claims of the Respondent. The Appellant’s appeal to

the Court of Appeal was dismissed and the judgement of the trial court affirmed by a

unanimous decision. The Appellant appealed to the Supreme Court.

The arguments and Issues before the Supreme Court

6 The rank of SAN is a privileged title conferred on practitioners who have distinguished themselves in the legal profession. It is the equivalent of the rank of Queens Counsel in the United Kingdom.

The Appellant argued that the provisions of the Warsaw Convention of 1929 which has been

domesticated in Nigeria under the Carriage by Air (Colonies, Protectorates and Trusts

Territories) Order 1953 (hereinafter referred to as CAO) applied exclusively to the cause of

action of the Respondent. The Appellants contended therefore that by the provisions of

CAO, the liability of an air carrier (like the Appellant) is limited to the thresholds set under

Section 22 (2) of CAO. It was contended for the Appellant that the grant of the Respondent’s

claim under the common law principles of breach of contract led to a wrong assessment of

damages and the claims ought to have been dismissed.

The Respondent contended that there was evidence before the trial court which shows that

the Appellant was clearly negligent and/or guilty of wilful misconduct bordering on wanton

or deliberate recklessness altogether in the performance of their obligations. He argued that

by Article 25 of CAO, once wilful misconduct is established, the provisions of CAO which

seeks to exclude or limit the liability of the carrier will not apply.

Decision of the Supreme Court

The Supreme Court in a unanimous decision allowed the appeal in part. The Apex Court

agreed with the Respondent and affirmed the decisions of the trial court and the Court of

Appeal that although the provisions of CAO applies to the claims of the Respondent,

however, there is a clear evidence of wilful misconduct on the part of the Appellant in the

discharge of its duties, and the two courts below were right not to apply the provisions of

CAO, which sets a limit of liability of the Appellant. The Supreme Court held therefore that

the trial court and Court of Appeal were correct in awarding all the specific heads of claims

as special damages under the common law as applicable to breach of contract.

However, the Apex Court allowed the appeal with regard to the award of £100, 000 as

(general) damages for stress and inconvenience and set aside the award. The Apex Court

held that the rationale behind compensatory theory of award of damages is found in the

maxim restitutio in integrum i.e. to restore the injured party to the position prior to the breach.

In the decision of the Court, an award of £100, 000 in addition to compensation for various

specific items granted to the respondent was manifestly too high, was without any justifiable

basis and amounted to double compensation. The contention of the Respondent urging the

Apex Court to follow a similar case of involving a celebrity, Victoria Beckham who was

awarded £100, 000 for loss of her baggage in the United Kingdom was rejected on the basis

that the facts were different. In Victoria Beckham’s case, the baggage was lost, but in this

case, the delivery of the luggage was only delayed. In any event, there is no evidence before

the trial court that any special declaration was made by the Respondent on the luggage as

was the case in Victoria Beckham’s case.

Comment

The decision has confirmed the position of Nigerian law on assessment of award of damages

for breach which is that the court will not award general damages where breach is alleged

and proved. The correct assessment remains such award that compensates the injured party

and places him in a position he would have been had the breach or injury had not occurred.

As such, the Courts would not lend themselves to award of general damages which would

amount to double compensation.

It is however important to note that this case is not in conflict with the decision of the

Supreme Court in Marine Management Association & Another v National Maritime

Authority7 where the Court awarded exemplary and aggravated general damages. In this

case, the Respondent in disobedience of a court order restraining from so doing, suspended

the vetting/inspection contract entered by both parties which had a term of 10 years. The

trial court awarded the general/exemplary damages in addition to financial loss directly

flowing from the contract. The Supreme Court confirmed the award of general/exemplary

damages because of what the Apex Court referred to as high-handed, outrageous, insolent,

vindictive, oppressive or malicious action of the Respondent showing contempt for the

rights of the Appellants in disregard of decent conduct of civilized men. The Apex Court

also found that the ignoble actions of the Respondent caused financial injury to the

reputation of the Appellants, therefore justifying the award of general damages.

Therefore, the general principle remains that general damages cannot be awarded for injury

arising from breach of contract. The exception as shown in the Marine Management

Association case is one that applies in very rare and uncommon situations such as where

there is oppressive conduct by those in positions of authority.

7 (2012) 18 NWLR (Pt. 1133) 504