· Rejects AIC’s $41.15m claim as loss of profit
· Says Nigerian subsidiary not party to contract
A Court of Appeal sitting in Lagos has affirmed the judgment of
a Lagos High Court that awarded $10 million damages against
Africa’s largest food retailer, Shoprite Checkers (PTY) Limited in
a suit filed by AIC Limited that the retail giant breached an
agreement to set up its Nigerian arm, ThisDay
reports.[1]
The appellate court, however, rejected a cross appeal AIC
instituted against Retail Supermarket Limited, Nigeria’s subsidiary
of Shoprite Group, asking it to award 50 percent of $92.3 million
against the subsidiary as loss of profit incurred due to the breach
of contract by its parent company.
In an unanimous judgment delivered on May 21, the court’s
three-man panel affirmed the award against Shoprite Group, thus
upholding the decision of the lower court that Shoprite Group
breached contract in its dealing with AIC.
Before the appeal was instituted, the trial court presided over
by Justice Lateef Lawal-Akapo had awarded $10 million damages
against the South African retail giant and its Nigerian subsidiary
for a breach of contract
Apart from the $10million award, the court had directed the
South African retail giant to pay 10 percent per annum on the
damages with effect from the date of judgment until final
liquidation of the entire sum.
Dissatisfied with the judgment of the trial court, Shoprite and
its Nigerian subsidiary jointly filed a notice of appeal with
several grounds, asking the appellate court to quash the decision
of the lower court.
On its part, AIC filed a cross appeal, demanding 50 percent of
$92.3million as loss of profit it suffered due to the incorporation
of Retail Supermarkets Limited, which it contended amounted to the
breach of the agreement for the period of 2005 to 2009.
In its decision, the three-man panel, comprising Justice Joseph
Ikyegh, Justice Tijjani Abubakar and Justice Ugochukwu Ogakwu,
threw out the appeal of Shoprite Group having established it
breached agreement it entered with AIC to jointly set up the
Nigerian subsidiary.
Ikyegh, who delivered the lead judgment, ruled: “I agree with
the appellants that since the court below did not find Retail
Supermarket liable, the award of damages and costs against it
cannot stand. The court below was therefore wrong to have awarded
damages against Retail Supermarket.”
The judge declared that he would “allow the appeal in part on
this issue and set aside the award of damages and costs against
Retail Supermarket; while the appeal of Shoprite Checkers is
dismissed for lacking in merit and the decision of the court below
as it affects Shoprite is hereby affirmed.
“The trial court held in its judgment that there was a
subsisting contract by conduct between the respondent and Shoprite
with respect to the joint venture, which the latter had breached
upon which it awarded $10 million damages and post-judgment
interest thereon in favour of the respondent against the
appellants,” he declared.
He noted that since Shoprite had by its conduct shown an
assurance of intention or representation to enter into legal
relation with the respondent with respect to the partnership
venture and the respondent acted upon it, it could not afterward be
allowed to retreat or resile from the promise of assurance.
It added that the South African retail giant “must accept its
legal relations as modified by it even though it is not supported
in point of law by any consideration, but only by its word or
conduct using the yardstick of a reasonable man.
“Accordingly, by allowing AIC to expend time, energy and
resources in the partnership endeavour and altering its position in
the belief based on the probability of both of them working
together in partnership, good conscience will not allow Shoprite to
avoid liability for altering AIC’s position.
“Even if there was no binding contract by conduct between
Shoprite and AIC, the dictates of good conscience grounded the
liability of Shoprite. The appeal on liability therefore lacks
merit.
“General damages are presumed by law to be the direct, natural
or probable consequence of the act complained of but the
quantification thereof is at the discretion of the court.”
With respect to the cross appeal filed by AIC, Ikyegh ruled: “In
the light of the fact that the award of $10 million general damages
arose from and was based on the same set of facts obtainable in the
other heads of damages, the court below was right to hold that to
award damages on the other heads of damages would amount to double
compensation.
“More so, the other distinct heads of damages were not proved.
Therefore, the court below would have fallen into deep error if it
had awarded the other heads of damages, which would have amounted
to windfall much against the principle upon which damages are
awarded.
“Pre-judgment interest was not established to have risen from
mercantile custom or statute or in the contemplation of the parties
and/or agreed upon by the parties at the making of the contract and
could not have been awarded in the circumstances of the case.
“The argument on post-judgment interest having been withdrawn by
AIC at the hearing of the cross-appeal are hereby struck out. In
the final analysis, I find no merit in the cross appeal and hereby
dismiss it and affirm the decision of the lower court. Parties are
to bear their costs,” he declared.
The judge noted that AIC did not establish that Shoprite Group
and its Nigerian subsidiary were aware or had knowledge of what
became special damages in the case at the time the transaction in
question occurred.
He, thus, ruled that AIC “cannot burden the cross-respondents
with what they were not expected in law to carry. It has to be
added, by way of emphasis, that damages are deemed to be in issue
where claimed in civil cases, unless expressly admitted which was
not the case here.”
Also, Ikyegh noted that AIC did not establish that what later
constituted special damages in the action was in the contemplation
of the parties at the time of making the contract.
He pointed out that at the time of making the contract, Retail
Supermarket “was then not in existence at the material time. In
this circumstance, the lower court could not have awarded the
special damages against the appellants.
“Now, aggravated damages are meant to compensate the plaintiff
for his wounded feelings. But a corporate body is an artificial
entity and may not have the anatomy to experience wounded/injured
feelings as distinct from injury to its credit or corporate image
as a corporate body.
“So, I do not, with deference, think the purport of aggravated
damages hinged on wounded feelings which may have to do with human
dignity will not fit a corporate body in the realm of the law of
contract. Exemplary damages also known as punitive or vindictive
damages can apply only where the conduct of the defendant merits
punishment.
“This may be considered to be so where the conduct is wanton in
the sense that the conduct disclosed fraud, malice, cruelty,
insolence or the like; or where the conduct is a contumelious
disregard of the plaintiff’s rights or where there is infraction of
statutory/constitutional right by public servants
“Projected loss of profits was documented. But AIC did not
establish that the anticipated loss was delivered to Shoprite at
the time of the contract. Shoprite and its Nigerian subsidiary
cannot, therefore, be burdened with what they did not reasonably
foresee or anticipate from the contract.
“The claim for loss of anticipated profit is by its nature
prospective in that the loss has not actually occurred. The specie
of claim is based on mere estimates, which suggests something that
is not final or something to be ascertained with exactitude at a
later date.
“But it does not mean the expenses had been incurred as it is a
preliminary statement of the probable cost of proposed undertaking
and is as good as an exercise in mere conjecture or guess-work
which is the opposite of precise calculation of damages.”
Also supporting the lead judgment, Ogakwu said: “having read the
records of appeal and the briefs of argument filed and exchanged by
the parties, I find that the manner in which the issues thrust up
for determination in the appeal and cross appeal were resolved in
the lead judgement are in consonance with my view.
“Accordingly, I adopt the reasoning and conclusion in the lead
judgment as mine. I equally allow the appeal in part, but only as
it relates to Retail Supermarket Limited. The appeal, as it relates
to Shoprite Group, is devoid of merit and it fails. In the same
vein, AIC’s cross appeal is bereft of any merit and it equally
fails.
“The decision of the lower court is consequently affirmed except
as it relates to Retail Supermarket Limited. I abide by the
consequential orders made in the lead judgment inclusive of the
order to costs,” Ogakwu noted.
Likewise, Abubakar adopted the lead judgment, saying his learned
colleague “has fully and sufficiently covered the field. I have
nothing useful to add. I adopt the entire judgment as my own and
endorse the consequential orders.”
· Rejects AIC’s $41.15m claim as loss of profit
· Says Nigerian subsidiary not party to contract
A Court of Appeal sitting in Lagos has affirmed the judgment of
a Lagos High Court that awarded $10 million damages against
Africa’s largest food retailer, Shoprite Checkers (PTY) Limited in
a suit filed by AIC Limited that the retail giant breached an
agreement to set up its Nigerian arm, ThisDay
reports.[1]
The appellate court, however, rejected a cross appeal AIC
instituted against Retail Supermarket Limited, Nigeria’s subsidiary
of Shoprite Group, asking it to award 50 percent of $92.3 million
against the subsidiary as loss of profit incurred due to the breach
of contract by its parent company.
In an unanimous judgment delivered on May 21, the court’s
three-man panel affirmed the award against Shoprite Group, thus
upholding the decision of the lower court that Shoprite Group
breached contract in its dealing with AIC.
Before the appeal was instituted, the trial court presided over
by Justice Lateef Lawal-Akapo had awarded $10 million damages
against the South African retail giant and its Nigerian subsidiary
for a breach of contract
Apart from the $10million award, the court had directed the
South African retail giant to pay 10 percent per annum on the
damages with effect from the date of judgment until final
liquidation of the entire sum.
Dissatisfied with the judgment of the trial court, Shoprite and
its Nigerian subsidiary jointly filed a notice of appeal with
several grounds, asking the appellate court to quash the decision
of the lower court.
On its part, AIC filed a cross appeal, demanding 50 percent of
$92.3million as loss of profit it suffered due to the incorporation
of Retail Supermarkets Limited, which it contended amounted to the
breach of the agreement for the period of 2005 to 2009.
In its decision, the three-man panel, comprising Justice Joseph
Ikyegh, Justice Tijjani Abubakar and Justice Ugochukwu Ogakwu,
threw out the appeal of Shoprite Group having established it
breached agreement it entered with AIC to jointly set up the
Nigerian subsidiary.
Ikyegh, who delivered the lead judgment, ruled: “I agree with
the appellants that since the court below did not find Retail
Supermarket liable, the award of damages and costs against it
cannot stand. The court below was therefore wrong to have awarded
damages against Retail Supermarket.”
The judge declared that he would “allow the appeal in part on
this issue and set aside the award of damages and costs against
Retail Supermarket; while the appeal of Shoprite Checkers is
dismissed for lacking in merit and the decision of the court below
as it affects Shoprite is hereby affirmed.
“The trial court held in its judgment that there was a
subsisting contract by conduct between the respondent and Shoprite
with respect to the joint venture, which the latter had breached
upon which it awarded $10 million damages and post-judgment
interest thereon in favour of the respondent against the
appellants,” he declared.
He noted that since Shoprite had by its conduct shown an
assurance of intention or representation to enter into legal
relation with the respondent with respect to the partnership
venture and the respondent acted upon it, it could not afterward be
allowed to retreat or resile from the promise of assurance.
It added that the South African retail giant “must accept its
legal relations as modified by it even though it is not supported
in point of law by any consideration, but only by its word or
conduct using the yardstick of a reasonable man.
“Accordingly, by allowing AIC to expend time, energy and
resources in the partnership endeavour and altering its position in
the belief based on the probability of both of them working
together in partnership, good conscience will not allow Shoprite to
avoid liability for altering AIC’s position.
“Even if there was no binding contract by conduct between
Shoprite and AIC, the dictates of good conscience grounded the
liability of Shoprite. The appeal on liability therefore lacks
merit.
“General damages are presumed by law to be the direct, natural
or probable consequence of the act complained of but the
quantification thereof is at the discretion of the court.”
With respect to the cross appeal filed by AIC, Ikyegh ruled: “In
the light of the fact that the award of $10 million general damages
arose from and was based on the same set of facts obtainable in the
other heads of damages, the court below was right to hold that to
award damages on the other heads of damages would amount to double
compensation.
“More so, the other distinct heads of damages were not proved.
Therefore, the court below would have fallen into deep error if it
had awarded the other heads of damages, which would have amounted
to windfall much against the principle upon which damages are
awarded.
“Pre-judgment interest was not established to have risen from
mercantile custom or statute or in the contemplation of the parties
and/or agreed upon by the parties at the making of the contract and
could not have been awarded in the circumstances of the case.
“The argument on post-judgment interest having been withdrawn by
AIC at the hearing of the cross-appeal are hereby struck out. In
the final analysis, I find no merit in the cross appeal and hereby
dismiss it and affirm the decision of the lower court. Parties are
to bear their costs,” he declared.
The judge noted that AIC did not establish that Shoprite Group
and its Nigerian subsidiary were aware or had knowledge of what
became special damages in the case at the time the transaction in
question occurred.
He, thus, ruled that AIC “cannot burden the cross-respondents
with what they were not expected in law to carry. It has to be
added, by way of emphasis, that damages are deemed to be in issue
where claimed in civil cases, unless expressly admitted which was
not the case here.”
Also, Ikyegh noted that AIC did not establish that what later
constituted special damages in the action was in the contemplation
of the parties at the time of making the contract.
He pointed out that at the time of making the contract, Retail
Supermarket “was then not in existence at the material time. In
this circumstance, the lower court could not have awarded the
special damages against the appellants.
“Now, aggravated damages are meant to compensate the plaintiff
for his wounded feelings. But a corporate body is an artificial
entity and may not have the anatomy to experience wounded/injured
feelings as distinct from injury to its credit or corporate image
as a corporate body.
“So, I do not, with deference, think the purport of aggravated
damages hinged on wounded feelings which may have to do with human
dignity will not fit a corporate body in the realm of the law of
contract. Exemplary damages also known as punitive or vindictive
damages can apply only where the conduct of the defendant merits
punishment.
“This may be considered to be so where the conduct is wanton in
the sense that the conduct disclosed fraud, malice, cruelty,
insolence or the like; or where the conduct is a contumelious
disregard of the plaintiff’s rights or where there is infraction of
statutory/constitutional right by public servants
“Projected loss of profits was documented. But AIC did not
establish that the anticipated loss was delivered to Shoprite at
the time of the contract. Shoprite and its Nigerian subsidiary
cannot, therefore, be burdened with what they did not reasonably
foresee or anticipate from the contract.
“The claim for loss of anticipated profit is by its nature
prospective in that the loss has not actually occurred. The specie
of claim is based on mere estimates, which suggests something that
is not final or something to be ascertained with exactitude at a
later date.
“But it does not mean the expenses had been incurred as it is a
preliminary statement of the probable cost of proposed undertaking
and is as good as an exercise in mere conjecture or guess-work
which is the opposite of precise calculation of damages.”
Also supporting the lead judgment, Ogakwu said: “having read the
records of appeal and the briefs of argument filed and exchanged by
the parties, I find that the manner in which the issues thrust up
for determination in the appeal and cross appeal were resolved in
the lead judgement are in consonance with my view.
“Accordingly, I adopt the reasoning and conclusion in the lead
judgment as mine. I equally allow the appeal in part, but only as
it relates to Retail Supermarket Limited. The appeal, as it relates
to Shoprite Group, is devoid of merit and it fails. In the same
vein, AIC’s cross appeal is bereft of any merit and it equally
fails.
“The decision of the lower court is consequently affirmed except
as it relates to Retail Supermarket Limited. I abide by the
consequential orders made in the lead judgment inclusive of the
order to costs,” Ogakwu noted.
Likewise, Abubakar adopted the lead judgment, saying his learned
colleague “has fully and sufficiently covered the field. I have
nothing useful to add. I adopt the entire judgment as my own and
endorse the consequential orders.”