GOWORA JA: The
appellant company (“the appellant”) sued the respondent for the payment of
damages in the sum of US$61 944.81 and costs of suit. The matter
proceeded to trial at the end of which the High Court found for the respondent
and dismissed the claim with costs. Dissatisfied with the result, the
appellant has launched this appeal.
The
appellant, which was the plaintiff in the court a quo is engaged in the
business of growing tobacco. During the 2007/2008 tobacco season, the Reserve
Bank of Zimbabwe (“the RBZ”) embarked on a retention scheme in terms of which
tobacco growers would be paid a portion of the proceeds on tobacco sales in
foreign currency. Farmers wishing to participate in the scheme had to
file applications through their commercial banks, which, in turn would forward
the applications, accompanied by the requisite payment in the local currency,
to the RBZ. The appellant successfully participated in the scheme and was
paid a portion of the proceeds from the sale of tobacco for that season.
In
September 2008 the appellant submitted an application with the respondent for
participation in the scheme for the year 2008. On 9 October 2008 the
appellant deposited Z$250 000 into an account held by it with the respondent to
meet the local component of the foreign currency to be paid by the RBZ under
the scheme.
In April 2009 the RBZ published a
list of farmers entitled to benefit under the scheme in an edition of the
Herald newspaper. The appellant's name was not on the list. The appellant
made enquiries with the respondent and the initial reaction from the respondent
was that the appellant had not forwarded an application for it to participate in
the scheme. Following further exchanges of correspondence, the
application was eventually located at which stage the appellant was advised
that during the relevant period its account had been overdrawn and as a result
the application could not be forwarded to the RBZ. It was also advised
that attempts would be made for the RBZ to accept the application even though
the deadline had passed. These attempts proved fruitless and the
appellant thereafter sued the respondent for damages in the sum of
US$61,944,81 representing the amount in foreign currency that the appellant
alleged it would have received from the RBZ, had the application been received
and processed by the RBZ.
In his judgment, the learned judge
in the court a quo found that had the respondent performed its
obligations and submitted the application to the Reserve Bank on behalf of the
appellant, then the appellant would have been in the same position as the other
growers whose claims had been properly submitted to the RBZ. He found
that there was a class action pending on behalf of the other growers and that
as a consequence he was not in a position to make a finding as to what the
growers would have been entitled to receive from the RBZ. The learned
judge concluded that the position of the appellant was the same as the other
growers who had yet to be paid by the RBZ and it would, in the circumstances,
be inequitable to place the appellant in a better position than that occupied
by growers with properly submitted claims.
On the question of prescription
raised by the respondent, the learned judge was of the view that prescription
on the debt would only start running once the listed growers' claims have been
finalised. The court accordingly dismissed the claim with costs.
The appellant has noted an appeal to
this Court on the grounds that the learned judge in the court a quo
erred in the following respects:
a)
in finding that the appellant's claim for damages for breach of contract was
premature;
b)
in finding that the quantum of plaintiff's claim could not be decided without
the RBZ being joined as a party to the proceedings;
c)
in failing to hold that as soon as there was a breach of contract, a
contractual claim for damages arose as a result of the loss of an expectation
to receive payment from the RBZ and in failing to make an estimation of the
value of such loss;
d)
in failing to estimate that the value of the loss was in fact the full amount
of the claim.
The appellant has premised its claim
on the publication of a list of beneficiaries under the scheme by the Reserve
Bank, which list however excluded the appellant. Although it published
such list, the RBZ has not made payments to all participants under the scheme
for the year 2008/2009. Before the court a quo it was common cause
that the Reserve Bank was yet to honour its obligations under the 2007/2008
growing season in full and that the payments for the season 2008/2009 season
had only been satisfied in respect of small scale growers whose individual
claims did not exceed US$1 000.
In my view the appeal is best
resolved by considering the matter according to the issues raised in the
grounds of appeal.
WHETHER THE APPELLANT'S CLAIM WAS
PREMATURE
It is well settled that the
governing principle behind the award of damages arising from a breach of
contract is to place the plaintiff in the same position he would have been had
the breach not occurred. If the bank had submitted the plaintiff's
application to the RBZ the plaintiff would be one of the farmers whose names
were published in the Herald as participants under the scheme. The court
was advised that the RBZ has not paid the major portion of amounts due under
the scheme and consequently affected farmers have instituted a class action
against the RBZ for payment under the 2008 foreign currency scheme detailed in
the Revised Operational Modalities of the RBZ.
In coming to the conclusion that the
appellant had not proved its case, the court a quo remarked at p 6 of
the judgment:
“…. It would be absurd and entirely
anomalous for it to be put in a more favourable position than those growers
whose applications were duly forwarded to the RBZ. At the present time the
rights and entitlements of the listed growers as against the RBZ are the subject
of the class action instituted by the ZTA. Until such time as that matter is
finally determined or until the RBZ opts to voluntarily pay out the listed
growers, whether fully or partially, it is not possible to quantify the measure
of damages due to the plaintiff by reason of the defendant's breach of
contract. In short, at the present time, the plaintiff holds what is
essentially a contingent right to damages as against the defendant, dependent
upon the eventual outcome of the claims lodged by the listed growers.”
In casu, when the breach
occurred, that is on the 31 December 2008, due to the failure by the bank to
meet the deadline in submitting the appellant's application, the appellant's
loss of the chance to participate in the scheme occurred and damages
immediately became due and payable. It is at that stage, as argued by the
appellant, that the complete cause of action arose and the period of
prescription would have started running as from that date. In view of
this, the appellant did not have to prove on a balance of probabilities that it
could have received payment from the RBZ, as long as it has established that it
was deprived of the chance to receive payment as a result of the respondent's
breach.
There is no dispute that the
appellant cannot benefit from the scheme. It cannot join in the suit
launched against the RBZ and it is clear that it is not in the same situation
as the farmers whose applications were duly processed and accepted by the RBZ.
To place the appellant on the same footing as those farmers would result
in prejudice being occasioned to the same. It has suffered damages by the
failure to have its application placed before the RBZ and this Court accepts
that it has been deprived of the chance to benefit under the scheme. Had the
respondent performed its contractual obligations, the appellant would have been
included in the list published by the RBZ. It would also have instituted
a claim for payment under the scheme.
In the event that a court eventually
makes a determination in favour of the farmers, the latter would have a
judgment against which they can execute. However no-one can predict or
speculate on the outcome of that suit. The appellant is not in the same
position as those other farmers as its application was never submitted to the
RBZ and consequently it does not have a claim against RBZ. To that
extent, its position differs from that of the other farmers participating in
the scheme.
The court
also erred in its finding on prescription, as the debt became due and payable
when the breach occurred. The claim against the RBZ is not the determining
factor as to when the appellant's claim became due and payable, and in my view
the finding that the claim was premature was clearly made in error.
COULD THE CLAIM BY THE APPELLANT BE
DECIDED WITHOUT HAVING THE RBZ JOINED AS A PARTY?
It is worth noting that on the
evidence adduced by the plaintiff very few of the tobacco farmers have been
paid under the 2008 scheme. Those claims that have been met are said to
be under USD $1000.00 in value. The learned judge in the court a quo
correctly stated that the allocation and expenditure of public funds was a
matter that stood on a different footing from any other form of expenditure or
disbursement of moneys. He correctly stated that such expenditure had to
be approved by Parliament and that in addition it was subject to executive
control and restriction in the best interest of the community. See Murray
v McLean N.O. 1969 (2) RLR 541 at 550-551. The learned judge,
properly in my view, could not make a determination as to whether the
restrictions placed on public funds under legislation could be invoked in the
matter before him.
In the view of this Court it was not
necessary to decide on the issue as it was not pertinent to the disposal of the
dispute. The RBZ was not a party before the learned judge but that
notwithstanding, the dispute was capable of resolution without recourse to
those considerations. The evidence that was placed before the High Court
was that a class action instituted by the by the Zimbabwe Tobacco Association
(“ZTA”) had still to be determined. The learned judge consequently found
that no detailed evidence was adduced as to the specific terms of the
publication by the RBZ of the list in question. The court was not, on the
evidence before it, able to determine whether the publication of the list
amounted to an unequivocal acknowledgment of indebtedness on the part of the
RBZ or a mere acknowledgment that the farmers listed thereon had submitted
applications for consideration to participate in the scheme. In this
regard the learned judge stated as follows at p 4 of the cyclostyled judgment:
“….The wording of paragraph 28 of
the RBZ's Revised Operational Modalities appears, prima facie, to be
couched as an undertaking to transfer the global US$ amounts claimed to the
growers respective banks. However, whether this constitutes a binding and
enforceable contractual undertaking is an issue that cannot presently be
adjudicated upon without full evidence and argument on the matter. Additionally
and in any event, it would be incompetent to decide this point without the RBZ
having been joined as a party to these proceedings.”
On appeal, the appellant has argued
that it did not have to prove that it would receive, on a balance of
probabilities, any payment from the RBZ. It contended that once it became
apparent that the appellant had suffered some loss, the court would be obliged
to assess the value of that loss on the best information it had available to it
by making a value judgment.
The
appellant instituted proceedings against the bank premised on a breach of the
latter's contractual obligation. The appellant did not make any
allegations against the RBZ and there is no suggestion that the RBZ was in some
way responsible for the failure to perform its obligations on the part of the
bank. The involvement of the RBZ only becomes an issue where the RBZ has
failed to meet its obligations under the scheme. It would also only be
relevant to the resolution in terms of the import of the Revised Operational
Modalities. However, the suit by the appellant is not concerned with the
obligations of the RBZ but the breach of the bank's obligations to the
appellant. I do not find that the failure by the appellant to cite the
RBZ necessarily made the resolution of the dispute difficult.
In my view
the learned judge in the court a quo erred when he found that the suit
could not be decided in the absence of the RBZ.
DID APPELLANT'S CLAIM ARISE FROM THE
LOSS OF AN EXPECTATION TO RECEIVE PAYMENT?
The appellant seeks that the
court quantify and asses the damages due to it arising from the loss of the
chance to participate in the RBZ tobacco growers scheme. The appellant
argues that it did not have to prove that it would, on a balance of
probabilities, have received any payment from the RBZ. The appellant
suggests that once it becomes apparent that it has sustained some loss, then
the Court is obliged, by making a value judgment, based on the best information
it has before it, to assess the value of that loss.
There exists no better example in
the exercise of a value judgment by a court in a situation such as this than Chaplin
v Hicks [1911] 2 K.B 786. I would with respect quote the remarks of
VUGHAN WILLIAMS L.J at p 791 where he said:
“….Now, the moment it is admitted
that the contract was in effect one which gave the plaintiff a right to present
herself and to take her chance of getting a prize, and the moment the jury find
that she did not have a reasonable opportunity of presenting herself on the
particular day, we have a breach attended by neglect of the defendant to give
her a later opportunity; and when we get a breach of that sort and a claim for
loss sustained in consequence of the failure to give the plaintiff an opportunity
of taking part in the completion, it is impossible to say that such a result
and such damages were not within the contemplation of the parties as the
possible direct outcome of the breach of contract. I cannot think these damages
are too remote, and I need say no more on the question of remoteness.
….It was said that the plaintiff's
chances of winning a prize turned on such a number of contingencies that it was
impossible for anyone, even after arriving at the conclusion that the plaintiff
had lost her opportunity by the breach, to say that there was any assessable
value of that loss. It is said that in a case which involves so many
contingencies it is impossible to say what was the plaintiff's pecuniary loss.
I am unable to agree with that contention. I agree the presence of all the
contingencies upon which the gaining of the prize might depend makes the
calculation not only difficult but incapable of being carried out with
certainty or precision. The proposition is that, whenever the contingencies on
which the result depends are numerous and difficult to deal with, it is
impossible to recover any damages for the loss of the chance or opportunity of
winning the prize. In the present case I understand that there were fifty
selected competitors, of whom the plaintiff was one, and twelve prizes, so that
the average chance of competitor was about one in four.”
And later at p 792:
“….I do not agree with the
contention that, if certainty is impossible of attainment, the damages for
breach of contract are unassessable.”
The RBZ had created, under the
retention scheme, the right of obtaining foreign currency at concessionary
rates for tobacco farmers and the appellant's right to be part of that class of
person cannot be disputed. It was however denied the right to participate
in the scheme by the respondent. The court has the unenviable task of
deciding whether or not a value can be placed on the loss by the appellant of
that chance.
In Woods v Walters 1921 A.D
303, 311 INNES CJ, stated that
“the plaintiff lost “the opportunity
of the mealie crop which would have been a profitable item. She was put to the
expense in having to live at a hotel and a tractor which had been specifically
ordered had been thrown on her hands. In the result a careful investigation
would have resulted in a substantial award.”
In a claim for damages arising
out of breach of contract the plaintiff has to be placed in the same position
he would have been in had the contract been properly performed. If the
bank had submitted the application for the appellant to participate in the 2008
scheme the appellant would at best have a claim pending against the RBZ as are
all the tobacco farmers who applied to participate in the scheme.
In the circumstances of this case,
the inescapable conclusion is that the appellant's claim arises from the loss
of an expectation to receive payment under the retention scheme facilitated by
the RBZ.
WAS THE VALUE OF LOSS THE FULL
AMOUNT OF APPELLANT'S DAMAGES?
A plaintiff who sues for damages is
required to prove his damages. A court will not presume damages in the
absence of proof of such damages by a plaintiff. However, the principle
that a plaintiff must prove his damages is not a strict rule, what is required
of a plaintiff is to place before the court all the evidence that is reasonably
available to him. Before this principle can come into effect it must be
established that the plaintiff has suffered some damages and that all that has
to be established is the quantum of those damages. This was stated by
SELKE J in the following terms:
“But to make such dicta into
inflexible rules applicable in every instance without regard to the
circumstances of the parties in respect of the availability of the evidence, or
to the precise nature of the claim, it seems to me, results not infrequently in
injustice. There must be many types of claims due to breaches of contract which
do not admit, for various reasons, of strict or detailed proof in terms of so
much money. For example, loss of business, especially in relation to the
future, cf. Bower v Sparks, Young and Farmers' Meat Industries Ltd 1936
NPD 1 at p 23.”[1]
In the
court a quo, the respondent conceded that the appellant had deposited a
sufficient sum to enable the bank to submit the application to the RBZ for the
consideration of allocation of foreign currency under the scheme. It was
never suggested that the appellant had failed to establish that it had suffered
loss or that the amount that had been deposited in local currency was
insufficient to qualify for the sum being sought from the RBZ under the
scheme.
This is not a case where an exact
quantification of the damages allegedly suffered by the plaintiff is possible.
In casu, there exists a real chance that if the bank had submitted the
plaintiff's application to the RBZ before the expiry of the deadline, then in
the event that the RBZ had paid to the claimants monies under the retention
scheme the appellant stood to be paid in United States dollars for the sum or
part thereof deposited by it into the bank's account and which payment would
have been forwarded to the RBZ under the scheme.
Recent authorities from the courts
in South Africa suggest that there is need to differentiate between the onus
imposed on a plaintiff regarding causation and quantum. In De Klerk
v Absa Bank Ltd & Ors SALR 2003 (4) 315 SCHULTZ JA quoted with approval
the remarks of STUART-SMITH LJ in Allied Maples Group Ltd v Simmons &
Simmons (A Firm) [1995] 1WLR 1602 (CA) to the following effect:
“In my judgment, the plaintiff must
prove as a matter of causation that he has a real or substantial chance as
opposed to a speculative one. If he succeeds in doing so, the evaluation of the
chance is part of the assessment of the quantum of damage, the range lying
somewhere between something that just qualifies as real or substantial on the
one hand and near certainty on the other. I do not think that it is helpful to
seek to lay down in percentage terms what the lower and upper ends of the
bracket should be.”[2]
It is an accepted principle of our
law that some types of damage are difficult to estimate and the fact that they
cannot be assessed with certainty or precision will not relieve the wrongdoer
of the necessity of paying damages for his breach of duty. The principle
is not a novel one and decided authorities have gone so far as to state that a
court doing the best it can with insufficient material may have to form
conclusions on matters on which there is no evidence and to make allowance for
contingencies even to the extent of making a pure guess. See Esso
Standard SA (Pty) Ltd v Katz 1981 (1) SA 964.
It is also accepted, in principle
that, a court will come to a plaintiff's aid in case of uncertainty and make an
estimate in his favour provided that he has led the best evidence available to
him. See Enslin v Meyer 1960 (4) SA 520. Facts may also be proved
not only by direct evidence but by inference and a man's intentions may be
proved through the observations of others. In Arendse v Maher 1936
TPD 162 GREENBERG J made the following pertinent remarks:
“It remains, therefore, for the
Court, with the very scanty material at hand, to try and assess the damage. We
are asked to make bricks without straw, and if the result is inadequate then it
is a disadvantage which the person who should have put proper material before
the Court should suffer. The means that I have at hand are extremely
unsatisfactory, but I propose to rely to some extent on the figures appearing
from the decision in Chisholm's case and to be guided by those figures.”
The existence of a contingency which
is dependant upon the volition of a third person does not necessarily render
the damages for breach of contract incapable of assessment. See Chaplin
v Hicks (supra) at 793 per L J FLETCHER MOULTON. At p 795 he
commented further:
“Then the learned counsel takes up a
more hopeful position. He says that the damages are difficult to assess,
because it is impossible to say that the plaintiff would have obtained any
prize. This is the only point of importance left for our consideration. Is
expulsion from a limited class of competitors an injury? To my mind there can
be only one answer to that question; it is an injury and may be a very
substantial one. Therefore the plaintiff starts with an unchallenged case of
injury, and the damages given in respect of it should be equivalent to the
loss. But it is said that the damages cannot be arrived at because it is
impossible to estimate the quantum of the reasonable probability of the plaintiff's
being a prize-winner. I think that, where it is clear that there has been an
actual loss resulting from the breach of contract, which it is difficult to
estimate in money; it is for the jury to do their best to estimate; it is not
necessary that there should be an absolute measure of damages in each case.
There are no doubt well-settled rules as to the measure of damages in certain
cases, but such accepted rules are only applicable where the breach is one that
frequently occurs.”
And later at 769:
“Is there any such rule, if it
existed as that where the result of a contract depends on the volition of an
independent party, the law shuts its eyes to the wrong and says that there are
no damages? Such a rule, if it existed would work great wrong…
…… Where by contract a man has a
right to belong to a limited class of competitors, he is possessed of something
of value, and it is the duty of the jury to estimate the pecuniary value of
that advantage if it is taken from him.”
In Goedhals v Graaff-Reinet
Municipality 1955 (3) S.A 482, HALL J, at 487C-E said;
“The general principle upon which
damages are to be assessed was laid in Victoria Falls and Transvaal and Power
Co. Ltd v Consolidated Langlaate Mines Ltd 1915 A.D. at p 22, where it is
stated that, so far as possible, the person injured must be placed in the same
position as he would have been if the contract had been performed. On this
principle it appears to me that the question which the trial court would have
to decide in order to assess damages in this case is what would the opportunity
of finding water be worth to the plaintiff under the circumstances of the
case.”
Similar remarks were issued by MASON
J in Trichardt v Van der Linde 1916 T.P.D 149 at 152-3 to the following
effect:
“Now, it is quite clear, in this
case, that there was a breach of the contract. It is quite clear that the
object of the contract was that the horse should be raced and win prizes. It is
quite clear that the breach defeated the very object of the contract, and the loss
of the chance is the actual and necessary result of the breach. Now, the matter
was considered in the case of Watson v Ambergate Railway Co (15 Jur.
448). There, the two judges differ as to whether the value of a chance should
be estimated for the purpose of damages, and Mayne on damages (6th
Ed. P 60), in commenting on the decision, accepted the view of the judge who
thought that a chance was not such an element of damages as could be estimated
and allowed for in a Court of Justice. But, all these authorities were
considered in the case of Chaplin v Hicks (1911, 2 K.B.D. 786), and
there it was held that-I think it was in a beauty competition-the loss of such
a chance was an element of damage which the jury were entitled to estimate the
value of, and the jury in that case awarded BP 100.00 damages, which was upheld
on appeal. In that case, the Court said there was no question that the loss of
the chance was the necessary result of the breach of the contract, and that
though it might be difficult to estimate what the value of a chance may be, it
was the duty of the jury to endeavour to do so, and if they awarded some
reasonable sum, the Court would not interfere.”
This
Court accepts that no detailed evidence was placed before the court a quo
on the legal implication attaching to the publication of the list of
participating farmers by the RBZ. The scheme, from the evidence before
the court a quo, was introduced at the instance of the RBZ to encourage
farmers to grow tobacco as a way of boosting the foreign currency earnings of
the country as a whole. It was a scheme under which the country was the
major beneficiary, in that following upon the sale of the tobacco crop the
farmer would be paid in the local currency with the foreign currency being retained
by the RBZ. The scheme however, presented an avenue through which farmers
could then obtain a benefit to access foreign currency in cash and kind, the
latter through the access to scarce farming inputs. Thus, at the end of
it all, the benefit would accrue to the country and the individual
farmer.
It is
correct that the appellant suffered damages but on the facts presented to the
court a quo it is almost an impossible task for a court to make an
assessment of the monetary damages due to the appellant. In Ebrahim v
Pittman N.O. 1995 (1) ZLR 176H at 187C-D BARTLETT J quoted with approval
the remarks of BERMAN J in Aarons Whale Rock Trust v Murray & Roberts
Ltd & Anor 1992 (1) SA 652(C) at 655H-656F to the following effect:
“Where damages can be assessed with
exact mathematical precision, a plaintiff is expected to adduce sufficient
evidence to meet this requirement. Where, as is the case here, this cannot be
done, the plaintiff must lead such evidence as is available to it (but of
adequate sufficiency) so as to enable the court to quantify his damage to make
an appropriate award in his favour. The court must not be faced with an
exercise in guesswork; what is required of a plaintiff is that he should put
before the court enough evidence from which it can, albeit with difficulty,
compensate him by an award of money as a fair approximation of his
mathematically unquantifiable loss…”
The appellant has urged this Court
to make the assessment as the evidence presented before the trial court was the
best evidence available to the appellant. The issue, however, is whether
the learned judge in the court a quo had sufficient evidence before him
to enable him to arrive at a quantification of the amount of damages that the
appellant had suffered due to the failure of the respondent to transmit the
application to the RBZ. In my view, the appellant presented to the court
the best evidence it had available, and the value of the loss constituted the
damages suffered.
DISPOSITION
The respondent conceded in the court
a quo that the deposit of Z$250 000 made by the appellant into the
account was sufficient to enable the respondent to submit the appellant's
application. The question before the court however is what sum constitutes the
value of the appellant's loss. Whether or not the appellant would have
obtained payment from the RBZ of the amount of foreign currency it required
from the Zimbabwe dollar equivalent paid to the respondent is not the issue, as
what it sued for was the loss of the chance. It is also not certain that even
if the application had been submitted to the RBZ in time the latter would have
paid any foreign currency to the participating growers nor is the extent of the
payment capable of exact calculation. Nevertheless the failure by the
respondent to file the application with the RBZ left the appellant in the
invidious position of having no basis to approach the RBZ for payment under the
scheme. The result is that the appellant is unable to make any meaningful
suggestion on the quantum of damages that this court should award in these
circumstances. That notwithstanding, this court should strive the best it can
to assess damages in this matter. I would respectfully associate myself with
the remarks of HOLMES JA in Anthony and Anor v Cape Town Municipality
1967 (4) SA 445 (A) at 451B-C to the following effect:
“I therefore turn to the assessment
of damages. When it comes to scanning the uncertain future, the Court is
virtually pondering the imponderable, but must do the best it can on the
material available, even if the result may not inappropriately be described as
an informed guess, for no better system has yet been devised for assessing
general damages for future loss”.
I also wish to associate myself with
the sage words of SCHUTZ JA in De Klerk v ABSA Bank Ltd & Ors
2003(4) SA 315, at 335F-H wherein he stated:
“The second consideration is this.
If, as may be found to be the case, an unlawful negligent (or, a fortiori, a
fraudulent) misstatement has resulted in the plaintiff being placed in the
invidious position of having to ask the Court to assess, with all the
difficulties inherent in the exercise, the value of his lost opportunity of
investing elsewhere, the Court should not be too astute to entertain dire and
pessimistic speculations emanating from the defendants that the plaintiff may
even be worse off if he had not been culpably misled into making the investment
that he did.”
Mindful of the caveat in the above
authorities with which I wholeheartedly agree not to be too pessimistic as to
the appellant's chances in benefiting from the retention scheme it therefore
remains for this court to assess the damages due to the appellant. The object
of damages for breach of contract in our law is to compensate the aggrieved
party for his actual pecuniary loss, and it is an accepted principle of the law
of damages that if he can prove none he is not entitled to any damages. So that
one may appreciate how this branch of the law has evolved over the years it
becomes necessary to examine persuasive decisions of the courts in South Africa
courts over a period of almost a century. The first seminal case on the issue
is Steenkamp v Juriaanse 1907 TS 980, wherein INNES C.J at p 986
said:
“We should adopt the principle that
where a plaintiff claims damnum, whether on contract or on tort, if no damnum
be proved he should not as a general rule, save in certain excepted cases which
do not arise here, be entitled to judgment. To my mind when a plaintiff comes
into Court simply to claim damages, and no damage is proved, he ought not to
obtain a nominal judgment. There is Roman-Dutch authority to support the ruling
of the late High Court, and I think we should decide to follow
it.”
In Wheeldon v Moldenhauer
1910 E.D.L 97 by KOTZE J.P made remarks to the following effect:
“… But there are many cases where a
person has been injured by another's breach of contract, and where it is
impossible to prove specific damage. In such cases it would be unjust to say
that it is left to the caprice of the person who has undertaken to do or not to
do something, to fulfil his obligation or not as he pleases, and in this way
the creditor would be entirely without any remedy, and would be prevented from
enjoying the benefits which he had stipulated for himself in the contract. In
my opinion this is not in accordance with the law. I am still of that opinion,
and I find several decisions of the Supreme Court of this colony which
recognise a plaintiff's right to nominal damages for breach of contract.”[3]
A broader examination of case
authority would tend to show however, that the courts in South Africa differed
fundamentally on the principle of the need to award nominal damages and the
guiding principles as to when such damages were available to a plaintiff. One
school of thought appeared to have favoured the award of nominal damages as a
matter of course where an injury had been established but the plaintiff had
failed to establish damages. The other school of thought was that damages
should not be awarded in the absence of proof of damages. In the latter case,
nominal damages were awarded where the plaintiff sought to establish a right or
claimed specific performance and damages were claimed in the alternative. In
the absence of proof of damages, the court would award nominal damages.
An instructive example of the court's approach in the latter case is Farmers'
Co-operative Society (Reg) v Berry 1912 A.D. 343, wherein INNES J
said at p352:
“… The present suit is not in the
main for damages, but for an order for specific performance as a test of the
defendant's right to disregard the regulations of the society. The claim for
damages is only in the alternative. It does not seem to me, therefore, to fall
within the authority of the cases quoted; and if it should appear that the
defendant cannot specifically perform his contract, then, in the absence of
exact proof of loss, this is certainly a case where nominal damages might
properly be given.”
In Solomon v The
Alfred Lodge 1917 CPD 177 KOTZE J stated at page 188:
“… But there are many cases where it
may be evident that a person has sustained loss through another's breach of
contract, and where it is impossible to prove specific damage. In such
cases it would be unjust to say that it is left to the caprice of the party,
who has undertaken to do or not to do something, to fulfil or break his
contract as he pleases, and leave the other party entirely without remedy.
Where, therefore, from the evidence or the nature of the case, it is plain that
some damage, though its amount cannot be definitely ascertained and proved, has
been sustained through the breach of contract, the plaintiff will be awarded a
small or trifling sum-exiguam summam-as Voet 45, 1, 12 terms it, or, as
we would call it, nominal damages. Now, the present case appears to me to fall
within this rule.”
It is
interesting to note that in the Solomon case (supra) KOTZE J awarded the
appellant an amount of one shilling as nominal damages on a claim for damages
wherein the plaintiff had been expelled from an unregistered benefit club. The
loss to the plaintiff was the benefit that membership in the club entitled her
to. It was considered that a trifling sum by way of compensation would be
appropriate in the circumstances of the case. The award for nominal
damages in that case was obviously made given the case where no actual monetary
loss was occasioned to the plaintiff as a result of the breach of contract on
the part of the defendant.
In Turtle v Koenig 1923
CPD 367, the plaintiff sued for damages arising out of the cancellation of a
written agreement of sale in respect of the defendant's interest in a hotel.
The defendant breached the contract and sold his rights therein to a third
party. The plaintiff sued for damages arising from the breach.
SUTTON AJA had occasion to consider the question of damages in the
absence of proof of such damages by a plaintiff. He stated the following
at p 371:
“Now there has been a great deal of
argument on the question as to whether the Court is entitled to grant damages
in a case where there has been a proof of a technical breach of contract. This
action is purely one for damages; it is not one for specific performance or a
declaration of rights; it is purely an action for damages and to my mind the
case I should follow is that of Steenkamp v Juriaanse (1907, T.S. 980).
The two judges who decided that case were ROSE-INNES C.J. and SOLOMON J., and
it seems to me it is a case which is likely to be upheld by the Appellate
Division. In that case the Court laid down that when an action is brought
solely for damages and not to establish any right which has been violated by
the defendant, the plaintiff must prove that he has actually sustained damage
and that in the absence of such proof he will not be entitled to judgment for
nominal damages. The matter was fully gone into in that case.”[4]
And later on at p 371-372:
“It seems to me too that the case of
Wheeldon v Moldenhauer (1910, E.D.L. 97) is not inconsistent with
the case of Steenkamp v Juriaanse. It is true that there are cases in
our Courts dealing with the question of nominal damages which are not very
helpful or harmonious, but the modern tendency is it seems to me not in favour
of granting nominal damages as that term is understood in England. The whole
tendency of our recent decisions is not in favour of adopting the English rule
of granting some damages because there has been breach of contract.
In the early days there were some
cases in our Courts where normal damages were granted in the absence of any
proof of damages, but the modern authority is against such decisions.
According to the decision in Wheeldon
v Moldernhauer (supra) where it is clear that some damages have been
sustained but the Court cannot say how much; where no definite amount has been
proved; then the Court is entitled to grant some damages called nominal
damages. That is not what the English Courts intended by nominal damages. In
the case of Wheeldon v Moldenhauer, KOTZE, J.P. held that as the
plaintiff had not proved what amount of damage he had suffered, but had proved
that he had sustained some damage, which, however, could not be properly fixed,
he was under the principles of the Roman Dutch Law as followed in South Africa,
entitled to nominal damages.”
The
position appears now settled in South Africa that the court cannot award
damages to a plaintiff who has failed to prove damages where the claim was
purely for damages and no other form of relief. This approach finds
confirmation in the case of Hersman v Shapiro & Co 1926 T.P.D
267. At p 379 STRATFORD J has this to say:
“Monetary damage having been
suffered, it is necessary for the Court to assess the amount and make the best
use it can of the evidence before it. There are cases where the assessment by
the Court is very little more than an estimate; but even so, if it is certain
that pecuniary damage has been suffered, the Court is bound to award damages.
It is not so bound where evidence is available to the plaintiff which he has
not produced; in those circumstances the Court is justified in giving, and does
give, absolution from the instance. But where the best evidence available has
been produced, though it is not entirely of a conclusive character and does not
permit of a mathematical calculation of the damages suffered, still, if it is
the best evidence available, the Court must use it and arrive at a conclusion
based upon it.”
And yet
the court seems to have been inconsistent in its approach as exemplified by the
dictum in Versfeld v South African Citrus Farms Ltd 1930 A.D 452
at 459 by STRATORD J,A. as follows:
“… On appeal Mr Buchanan relied upon
a principle in the assessment of damages exemplified in the case of Turkstra
Limited v Richards (1926 T.P.D.276) and thus stated:
“When there is a finding or an
admission that damage has been caused in a monetary amount, the court must do
its best to assess the amount on such evidence as is available, and you cannot
non-suit a plaintiff because, in the nature of things, the damage cannot be
computed in exact figures.”
In Du Plessis v Singer 1931
CPD 105 GARDINER JP stated at p 108:
“But even
if cancellation was not justified, and the plaintiff must be held bound by the
lease, he would, in my opinion, be entitled to claim damages for not getting
occupation of part of the leased premises, and his remedy is not confined to a
remission of part of the rent-see Pothier, Contract de Louage (sec. 67), Voet (19.2.26).
Here, in fact, he is not claiming a declaration that the lease is cancelled,
but is claiming damages for not getting possession. If he gave prima facie
proof that he did not get possession of part of the premises, and if he showed
that he sustained damages thereby, absolution should not have been granted. On
the evidence it is not possible to arrive at any exact estimate of the damages
he suffered, but that he did sustain some damages, was I think, established. At
the least, therefore, he should have had nominal damages.”
On a reading of the various South
African cases one discerns a distinct impression that the courts have accepted
that the principle of nominal damages is available to a plaintiff in certain
circumstances and that it is not necessarily available to a plaintiff who has
proved a technical breach of contract and is unable to prove damages. It is a
concept derived from the English law although its application did not follow
the English law, and thus in the later cases there appears to be an attempt on
the part of the courts to adhere to the English law in applying the principle
on the awarding of nominal damages.
There has been much debate within
the courts as to when a plaintiff should be awarded nominal damages, and it is
not exactly clear, despite the debate both from the courts and jurisprudential
authors as to whether or not nominal damages should be awarded to a plaintiff
who has proved breach of contractual obligations and has suffered los, but has
not proved the extent of the damaged suffered. In their book Law of Damages
the learned authors Visser and Potgieter state thus:
“Despite opposition, nominal damages
were also awarded for breach of contract. Cases where a small amount of damages
was awarded should not really be cited as support for the concept of nominal
damages. In some instances it was held that the court may not award nominal
damages unless an action is instituted to vindicate a right which will have
some value in future or unless breach of contract was intentionally committed.
The availability of an action for nominal damages upon breach of contract has
been confirmed by the Appellate Division but several authors express doubt
whether this is still the position. They state that since 1935 there has been
almost no reported cases of nominal damages and that a plaintiff who has not
proved his damage is not entitled to any compensation. It is probably correct
to argue that nominal damages have no place in our law, but until the Appellate
Division finally confirms this view, it cannot be concluded that nominal
damages have disappeared.” [5]
Christie, in his book The Law of
Contract in South Africa[6]
appears to favour a different approach to the question of damages wherein the
plaintiff has failed to establish any damages. This is what he has to say:
“The question whether, when damages
cannot be proved, nominal damages may be awarded, has caused some difficulty,
but the present law can be stated with reasonable certainty. Early cases in the
Cape and Transvaal adopted, not expressly but quite clearly, the English
practice of awarding purely nominal damages (10c or so) sometimes as a peg on
which to hang costs, sometimes with each party paying his own costs, and
sometimes with costs to the defendant, without distinguishing between the cases
where the plaintiff has suffered no loss, cases where it is clear he has
suffered some loss but it is impossible to say how much and cases where the
plaintiff's concern is to establish a right.
This practice was defended by KOTZE
CJ in Stow, Jooste & Mathews v Chester & Gibb (1890) 3
SAL 127, but it did not long go unchallenged. In Weber v Africander GM
Co (1899) 16 CLJ 128 (SAL), Gregorowski CJ said:
“It is
true that in England nominal damages are sometimes awarded where there has been
a breach of contract without damage, but our law requires a definite damnum
to give rise to an action for damages. The case where a right which may be
valuable in future is denied is denied is the only case where damnum
would be assumed in consequence of an unlawful act.”
This distinction between an
unsuccessful attempt to prove loss, where the plaintiff should fail, and the
establishing by an award of nominal damages which may become valuable in the
future became accepted law in the Transvaal in a line of cases of the former
type. Referring to some of these cases in Farmers' Co-op Society
(Reg) v Berry 1912 AD 343 352 Innes CJ gave them the Appellate Division's
approval:
“But the
rule laid down in these cases was in terms stated to be subject to certain
exceptions, and it was a rule applicable to claims for damnum alone. The
present suit is one not in the main for damages, but for an order for specific
performance as a test of the defendant's right to disregard the regulations of
the society. The claim for damages is only in the alternative. It does not seem
to me, therefore, to fall within the authority of the cases quoted; and if it
should appear that the defendant cannot specifically perform his contract,
then, in the absence of exact proof of loss, this is certainly a case where
nominal damages might properly be given.”
Cases of the second type, like Berry's
case, where nominal damages may appropriately be given to establish a
right, are rare because a plaintiff seeking such relief will more frequently
ask for a declaration of rights, but Berry's case makes it clear that he is not
obliged to adopt that course.
Since Berry's case it can be
accepted that the early Cape and Transvaal cases referred to at the beginning
of the previous paragraph are no longer good law, and our courts are entitled
to award nominal damages in the English sense of 10c or so only for the purpose
of establishing the plaintiff's rights.
But nominal damages in the different
sense of a token payment of ordinary damages (R20 or so) may be awarded when
the plaintiff proves breach causing him loss but is unable to prove the amount
of the loss or that it is substantial. Kotze JP developed this principle
in a series of cases in the Cape and Eastern Districts, which have been
followed in those divisions. Founding on Voet 45 1 12, he said in Wheeldon v
Moldenhauner 1910 EDL 97 101:
“Here we
have a distinct authority for the view that, where there has been a breach of
contract, and the plaintiff is unable or finds it difficult to prove what loss
he has sustained, or the extent of that loss, it does not follow that he must
fail in his claim, for the Court may award him merely a trifling sum (exiguam summam),
that is, nominal damages. This will certainly be true where it is clear that
some damage, however slight or unascertainable, has been sustained by the
plaintiff.”
The last sentence of this passage is
most important, for in cases to which those words apply damages of the order of
R20 have frequently been awarded,[7]
but where the plaintiff has failed to prove that he has suffered any loss at
all, no damages have been awarded.[8]
Thus understood there is no conflict between these Cape and Eastern District
cases and the Transvaal cases approved in Berry's case.”[9]
The seminal case on the entitlement
of a plaintiff to be awarded damages for the loss of a chance is Chaplin v
Hicks (supra) and the appellant's contention that the respondent had failed
to prove damages and in the circumstances was only entitled to nominal damages
was rejected by the court. LORD FLETCHER MOULTON said:[10]
“Mr McCardie does not deny that
there is a contract, nor that its terms are as the plaintiff alleges them to
be, nor that it is enforceable, but he contends that the plaintiff can only
recover nominal damages, say one shilling. To start with, he puts it thus:
where the expectation of the plaintiff depends on a contingency, only nominal
damages are recoverable. Upon examination, this principle is obviously much too
wide; everything that can happen in the future depends on a contingency, and
such a principle would deprive a plaintiff of anything beyond nominal damages
for a breach of contract where the damages could not be assessed with
mathematical accuracy. The learned counsel admitted that it was very difficult
to formulate his proposition, but he ultimately said that where the volition of
another comes between the competitor and what he hopes to get under the
contract, no damages can, as matter of law, be given. I can find no authority
for that proposition; in fact the decision in Richardson v Mellish[11]
is obviously in the teeth of it. I do not rely, however, on that or any other
authority; I would rather consider what is the right of a plaintiff as regards
damages for breach of contract, and regarding it as a matter of broad
principle, I do not think that any such distinction as that suggested by Mr
McCardie can be drawn.
………
But there is no other universal
principle as to the amount of damages than that it is the aim of the law to
ensure that a person whose contract has been broken shall be placed as near as
possible in the same position as if it had not. The assessment is sometimes a
matter of great difficulty.”
This case was approved and applied by ASWORTH J in Hall v Meyrick [1957]
2 Q.B 455 at 472 whereat it was stated:
“Any assessment of damages in a case
of this sort is bound to appear somewhat arbitrary, but I have endeavoured to
find a figure which fairly represents the plaintiff's loss after giving due
allowance for all the uncertainties. The sum for which I give judgment in
favour of the plaintiff is 1,250 pounds.”
The courts both in this country and in South Africa have recognised the
principle of prospective loss in restricted instances. One such instance
relates to the loss of a chance. It can be said that the issue relating to a
claim for damages following upon the loss of a chance appears to be on a
different footing and that following upon the dictum in Chaplin v Hicks (supra)
the approach of the courts has been consistent. The loss of a chance is however
described as a form of prospective loss which has been recognised within the
English Jurisdiction and that of South Africa. So far as I am aware the present
case is the second case within this jurisdiction where the court is being asked
to make an award of damages so that a plaintiff who has suffered damage does
not walk away empty handed due to a failure to prove damage that is
quantifiable. The first case decided within this jurisdiction is A.G.
Hendrie & Co Ltd v McGarry 1938 SR 209 in which HUDSON J stated
at p 218:
“Bearing
in mind in the present case that the plaintiff's agency was revocable, that the
hotel was not a readily saleable property and that Gammon might have leased or
purchased another hotel, I have come to the conclusion that in this case too
the damages must be assessed at a figure considerably lower than the amount of
the commission. Exact computation of damages is not possible in the
circumstances of the case, but there has been a deliberate breach of contract
and the damages must be substantial, and not merely nominal, in spite of the
impossibility of exact assessment: Chaplin v Hicks (1911, 2 K.B. 786). After
giving consideration to all the factors involved in the case I have come to the
conclusion that the damages should be assessed at 75
pounds.”
It is accepted that in assessing damages the court must as one of the aspects,
have regard to the events that have occurred from the damage causing event to
the date of the action in order to reach a more realistic assessment of the
damage.[12]
This principle is based on the existence of uncertainty about the arising and
impact of a factor which in its nature is relevant to the assessment of
loss. A court therefore has no better method than to place a value on
that factor according to the Court's prognosis. As certainty arises, the need
to speculate about probabilities and to evaluate expectations dwindles, and the
actual facts form the basis for calculations.[13]
In addition, the court is obliged to
take into account any relevant conditions that would necessarily affect the assessment
of damages. In the court a quo it was common cause that although the RBZ
had not paid the major growers, it had paid out small claims not exceeding USD
1000. The appellant appointed the respondent as its agent in the facilitation
and implementation of its application under the scheme. When it lodged its
application with the respondent and paid the local currency stipulated it
acquired a benefit to participate and at the conclusion of the season receive a
value in foreign currency. It thus acquired an advantage to which a value
could be attached. It is therefore the duty of the court to estimate the
pecuniary value of that advantage.
The court must remain alive to the
possibility that the RBZ may be able to satisfy a trial court that it had no
obligation to meet the claims of the tobacco growers who participated in the
scheme, or that in the event that a court found in favour of the farmers, the
RBZ would seek statutory protection to avoid payment under the scheme.
The fact that payment was made to farmers with smaller claims would point
to a lack of capacity to pay as opposed to reluctance to pay. Finally, the
court has to consider that even though the applicant funded its account with
the required local currency, it was not transmitted to the RBZ but remained in
the account and that the respondent offered to pay it back.
In view of the fact that the
appellant did not pay to the RBZ, not through its fault, I intend to discount
the sum claimed by fifty percent, resulting in the sum of USD 30 972.40. In
addition, in view of the seeming difficulties of the RBZ to pay, as exhibited
by the delay in payment, I intend to further discount the sum. An
additional discount of fifty percent on the discounted sum would appear to me
to meet the justice of the case. Such discount would allow an award of
USD15 486,20. The appellant did not claim interest and the order that I will
issue will not specify interest.
The above method of computing
the damages due to the appellant is admittedly arbitrary but I cannot think of
any better way of assessing damages in this case. Although the appellant did
not succeed in the claim for the sum of USD61 944.81 that it was seeking from
the respondent, it has established not only the liability but an award in a
specified sum. In the event, the appeal must succeed.
In the
result it is ordered as follows:-
1.
The appeal is allowed with costs.
2.
The order of the court a quo is set aside and substituted with the
following:
2.1
Judgment be and is hereby granted against the defendant in favour of the
plaintiff in the sum of USD 15 486.20 together with interest thereon at the
prescribed rate with effect from the date of this judgment.
2.2
The defendant is hereby ordered to pay the costs of suit.
GARWE
JA:
I agree
OMERJEE
AJA: I
agree
Wintertons, appellant's legal practitioners
Scanlen & Holderness, respondent's legal practitioners
[1]See Bowman
v Stanford 1950 (2) SA 210 (D) at 222-223
[2]At
p1614C-E
[3]At p 100
[4]At p 371
[5]At pp
158-159
[6]3 ed
[7]See
Solomon v The Alfred Lodge (supra); Emslie v African Merchants Ltd 1908 EDC 82,
95; Kelly v Kelly 1913 EDL 153,164
[8]See
McCallum v Cornelius and Hollis 1910 NPD 52,62; Turtle v Koening 1923 CPD 367,
372
[9]At pp
604-606
[10]At
pp793-794
[11][11](1824)
2 Bing. 229
[12] See
General Accident Ins Co Sa Ltd v Summers etc 1987 (3) SA 577 (A) at 615;
[13]Glass
v Santam Ins Ltd 1992 (1) SA 901, 902
