(1984) 1 CLR 135
[*135] 1984 February 21
[A. LOIZOU, J.]
THUNDER SHIPPING CO. LTD.,
Plaintiffs,
v.
I. LLOYD TRIESTINO, DI.NAV. S.P.A.
2.ADRIATICA DI. NAV. S.P.A
3.A.L. MANTOVANI & SONS LTD.,
4.THE SHIP “EGIZIA”,
Defendants.
(Admiralty Action No. 45/81).
Admiralty—Shipping—Bill of landing—Exemption clause—Agreement for shipping space—Bill of lading not the contract because the contract has been made before the bill of lading—Since shippers have concluded above agreement with sip–owners latter are liable thereunder.
Damage—Remoteness—Principles applicable—Section 73 of the Contract Law Cap. 149—Breach of contract for booking space—Interest paid because of delay in arrival of goods and loss resulting from increase in exchange rate not recoverable—2% by way of damages on the C.L.F. value of goods recoverable because it was within the contemplation of the parties that such damage might result.
Contract—Principal and agent—Agent entering into contract on behalf of a disclosed principal—Not personally bound by it—Section 190 of the Contract Law, Cap. 149.
Defendants 1 and 2 were Italian companies engaged in sea transport. Defendants 3 were a company registered in Cyprus and they were the Cyprus agents of defendants 1 and 2. Defendant 4 was a regular line vessel sailing from Trieste to Cyprus. In August 1980 the Managing Director of the plaintiffs called at the offices of defendants 3 and booked shipping space from Trieste to Limassol for the carriage of 324 washing machines.[*136]He specifically informed defendants 3 that these goods had to be shipped on or before the 30th September, 1980 for the reason that he was committed with their buyer under a penalty to the effect that if these good were not so shipped he had to pay 2, on their C.I.F. value as per the agreement between hint and their buyers. The goods were not shipped on the above date but on the next trip of the ship and arrived in Cyprus with 15 days delay. Hence this action against the defendants for:
(a) damages by way of 2% on the C.L.F. value of the goods as above stated.
(b) £1,147 loss in difference of exchange rate.
(c) £21.810 difference of freight.
(d) £8.415 interest.
Regarding (b) above plaintiffs had to pay for the value of the goods in English pounds and on account of the delay in their arrival they had to pay a higher rate of exchange.
Defendants contended that they were exonerated from liability in view of Article 23 of the bill of landing.
After finding that the plaintiffs have concluded an agreement with defendants 2 for the booking of shipping space.
Held, (1) that the bill of lading is not the contract, for that has been made before the bill of lading was signed and delivered, but it is excellent evidence of the terms of the contract, and in the hands of an indorsee is the only evidence; and that it is open to the shipper to adduce oral evidence to show that the true terms of the contract are not those contained in the bill of lading; that since plaintiffs have concluded an agreement with defendants 2 for the booking of shipping space; they proved their case as against defendants 1, 2, and 4 on whose behalf defendants 3 were acting as agents; and that the action against defendants 3 must be dismissed as the prerequisites that are prescribed in section 190 of the Contract Law, Cap. 149 do not exist to render them personally liable by the said agreement and therefore liable in damages for that.[*137]
(2) That the defendants would be liable for damage resulting from special circumstances when those special circumstances have been brought home to them in such a way as to show that he has accepted or is taken to have accepted risk of payment of 2 by way of damages; that this amount will be allowed as not only the parties contemplated that the damages. Resulting from the special circumstances might occur, but they further contemplated that the defendant was taking the risk of being liable for such consequences should it occur (see s. 73 of Cap. 149).
(3) That losses resulting from revaluation of currencies are always too remote in law to he recoverable; and that, further, it is not clear that the parties actually contemplated the possibility of revaluation during the period between the date of the contract and the date of payment for the goods as being a sufficiently serious possiblity or real danger to justify their making express provision for that eventuality; that in the absence of such an express provision and bearing in mind the other circumstances of this case this Court cannot assume that the parties have contemplated that late delivery was liable to result in the buyers suffering the loss by the payment of an enhanced price; and that, accordingly, the loss resulting from the difference in exchange cannot be allowed as damages recoverable.
(4) That as regards the interest claimed, in the absence of any provisions of the law and on the facts of this case, this item cannot be recovered by the plaintiffs as it is generally presumed not to be within the contemplation of the parties at the time of making the contract and there is nothing to point out to the contrary.
(5) That the difference in the freight is recoverable.
Judgment against defendants 1, 2and 4. Action against defendants3 dismissed.
Cases referred to:
Attorney-General (Owner of Cargo) v. The Ardennes (Owners) [1950] 2 All E.R. 517 at pp. 519-520;
Hadley. v. Baxendale, 9 Ex. 341;[*138]
Robophone Facilities v. Black [1966] 1 W.L.R. 1428 at p. 1448;
D. Ferdinando v. Simons Smith & Co. Ltd. [1920] 3 K.B. 409;
S.S. Celia v. S.S. Volturno [1921] 2 App. Cas. 544.
Admiralty Action.
Admiralty action for C£2,128.986 mils by way of damages and/or compensation and /or otherwise for breach by the defendants of a contract to transport and/or carry from Trieste to Limassol 324 units of Hoover automatic washing machines.
A.P. Anastassiades, for the plaintiffs.
Chr. Mitside, for the defendants.
Cur.adv. vult.
A. LOIZOU J. read the following judgment. The plaintiff’s are a private company registered in Cyprus with limited liability. Defendants 1 and 2 are Italian companies engaged in sea transport and/or shipping. Defendants 3 are a Company registered in Cyprus and they are the Cyprus agents of defendants 1 and 2. Defendant 4 is the ship “EGIZIA”, which as the evidence goes, was a regular line vessel sailing at the material time from Trieste to Cyprus, via Piraeus, being an optional port of call taking weather permitting about seven to eight days to do the trip each way.
The plaintiffs claim against the defendants jointly and severally and/or otherwise as follows:
(1) C£2, 128.986 mils by way of damage and/or compensation and/or otherwise for the breach by the defendants and/or anyone of them of a contract entered into by the said Company on the one part and the defendants and/or anyone of them on the other part under which contract the defendants and/or anyone of them undertook the obligation to ship and/or take on board and/or transport and/or carry from Trieste to Limassol and/or duly deliver there on or before the 30th September 1980 a cargo of 324 units of Hoover automatic washing machines packed in containers marked ‘FOR NASRALLAH’ 1-108.[*139]109-216, 217-324 and/or in respect of which although the defendants and/or each and/or anyone of them issued at Trieste on the 27.9.1980 a bill of lading No. 43, they failed to honour their relative obligation as aforesaid to ship and/or take on board and/or transport and/or carry and/or duly deliver the said cargo thus causing damage to the plaintiffs.
(2) Legal interest.
(3) Costs.
The plaintiffs have called only one witness, namely Mr. George Hourry, their Managing Director and main shareholder. He testified that in August 1980 he called at the offices of Defendants 3 and saw a certain Mr. Napoleon, a senior official and who was dealing with him all along. The purpose of his visit was for booking shipping space from Trieste to Limassol for the carriage of 324 washing machines manufactured by Hoover. He specifically informed Mr. Napoleon that these goods had to be shipped on or before the 30th September 1980, for the reason that he was committed with their buyer under a penalty to the effect that if these goods were not so shipped he had to pay 2% on their C.I.F. value as per the agreement between him and their buyers. This agreement has been produced (exh. 5) at the instance of the defendants and reference to it will be made in due course.
The value of the goods in question as stipulated therein was U.S. $110,160.-. Having impressed on Mr. Napoleon the importance of the time of shipment of the said goods and making everything clear regarding the contents of the aforesaid agreement, this witness claimed that an agreement was concluded between him and defendants 3 for the carriage of the goods in question on the defendants vessel “EGIZIA” and a receipt dated 21st August 1980, exhibit 1, was issued to him upon paying the sum of £2,250.-. This receipt reads:
“A. L. MANTOVANI & SONS, Ltd.
No. 0274
Limassol, 21.8.1980,[*140]
Received from Messrs. Thunder Shipping the sum of C€2,250.- (two-thousand two-hundred and fifty pounds only) as deposit on freight for 6X20 containers Trieste- Limassol”.
This receipt was issued by defendants 3 and signed by their cashier on their behalf.
On the 14th August, 1980, the plaintiffs, addressed the following telex (No. 3 in the bundle of document, exhibit 3):
“URGENT ATTN: MR. NAPOLEON
RE: (6) SIX 20 FT FCC TRIEST / LIMASSOL REFERENCE RECENT PLEASANT ARRANGEMENT REGARDING SEAFREIGHT IN CONNECTION WITH ABOVE, PLEASE NOTE:
FULL ADDRESS NAME SHIPPERS IN TRIESTE: FRAN CESCO PARISI, P.O. Box 577, TRIESTE TLX TS46171 TEL No. 7359’
PLEASE INSTRUCT ADRIATICA LINE CONTACT THEM IMMEDIATELY TO CO-ORDINATE LOADING (SHIPMENT) THUS DELAYS BE AVOIDED MANY THANKS FOR YOUR KIND CO-OPERATION SINCEREST RGDS”.
On the 22nd August, 1980, telex No. 4 in the same bundle was sent.
“REFERENCE TO-DAYS PHONE CONVERSATION MR. NAPOLEON/HOURY
RE: 6 X 20 FT CONTAINERS-TRIESTE/LIMASSOL FOR. GOOD: ORDERS SAKE WE CONFIRM HEREWITH THAT THE 6 X 20 FT CONTAINERS ARE CHANGED TO 3 X 40 FT. CONTAINERS; PLS ADVISE FORTHWLTH YOUR PRINCIPALS OF THIS CHANGE SO THAT MISUNDERSTANDINGS BE AVOIDED.
HAVING RELIED ON YOUR SAYSO THAT NO PROBLEM WILL ARISE IN THIS RESPECT, WE CONFIRMED SHIPPERS OUR OK, SINCEREST RGDSTHUNDER SHIPPING (G.E. HOURY)”.
On the 30th September the plaintiffs received a telex from their correspondence in Trieste (Telex No. 5), that the goods were[*141]to be shipped on that date on S/S EGIZIA sailing the same night from Trieste to Limassol where it was expected to arrive on the 8th October 1980.
On the 27th September 1980, the Bill of Lading No. 43 (exhibit 2) was issued with Hoover Ltd. of Perivale, Greenford, Middlesex, described as shipper and to “Order of Bank of Cyprus Ltd., Limassol Main Branch and Thunder Shipping Co. Ltd.”, as consignees for the shipment of the goods described therein on the vessel “EGIZIA” for their transport from Trieste to Limassol. It is signed by defendants 2 as agents of defendants 1.
The aforesaid witness inquired by telexes to defendants 2 in Trieste and their agent in Larnaca when the ship was going to arrive at Limassol and eventually he found out that the ship arrived at Larnaca on the 8th October. He immediately asked the agent to give him a delivery order so that he could get the three containers mentioned in the said Bill of Lading but he was informed that there was a note in the ship’s manifest that these three containers were short-shipped, (see telex No. 6— exhibit 3). Thereupon he protested to defendants 3 by sending telex No. 1 in exhibit 3. He was holding them and their “principals fully responsible for heavy damages caused to us due to your/their misleadment, failure, and negligence, by leaving behind our cargo in above containers handed to them and received by them, prior to above dates, and in time as demanded by them. We will submit our losses account very soon”.
They replied thereto by telex No. 7 which reads:
“RE: M/V “EGIZIA” 28-30.9.80 TRIETSE/LIMASSOL 3 X 40 FT. CONTAINERS-NOS: CTIU 418926/9, 415721/4, 422399/6
THANKS YOUR TELEX OF 9/10/80 AND AS EXPLAINED TO YOU OVER THE PHONE YESTERDAY THE CARGO WAS UNFORTUNATELY LEFT BEHIND DUE TO TECHNICAL REASONS HOWEVER WE CAN ASSURE YOU THAT THE THREE CONTAINERS WILL BE SHIPPED ON M/V “EGIZIA” NEXT SUNDAY OR LATEST MONDAY WHICH ARRANGEMENT YOU CONFIRMED YESTERDAY [*142] IS SATISFACTORY TO YOU BECAUSE YOU WILL BE WITHIN THE ‘ALIDITY OF THE LETTER OF CREDIT
WE TRUST THAT THIS NOW SOLVES YOUR PROBLEM BEST REGARDS”.
The plaintiffs then replied to it by telex No. 8 which is as follows:
“CONTENTS STATED THEREIN INACCURATE AND UNACCEPTABLE.
1.CARGO BOOKED BY F. PARISI WITH AVDRIATICA SINCE 15.9.80
2.FREIGHT PAID THROUGH YOU SINCE 21.8.80
3.F. PARIVSI DELIVERED TO ADVRIATICA THE THREE CONTAINERS AS THEY WANTED THEM. AND ADRIATICA ISSUED VTHE RELEVANT B/LADING.
4.ACCORDING CONCRETE EVIDENCE TECH NIVCAL REASONS V YOU ALLEGED NEVER EXISTED. ADRIATICA ACTED IN CHILDISH AND IRRESPONSIBLE MANNER. THEY OVERBOOKED CARGOES, AND THEY LEFT THEM BEHIND. BUT THEY SHOULDNT LEAVE BEHIND OURS, FOR WHICH FREIGHT WAS PAID SINCE 21.8.80.
5.IT JS A FACT THAT WE CONSENTED WITHOUT PREJUDICE, AND WITH RESERVATION OUR RIGHTS FOR GOODS TO BE SHIPPED ON.12-13.10.80.
6.WE V FLATLY DECLINE THAT SUCH ARRANGEMENT WAS EVER SATISFACTORY TO US.
7.WE NEVER SAID WE WERE WITHIN VALIDITY OF L/C. IN FACT WE WERE NOT. L/C EXPIRED AND WE HAD TO OBTAIN AND GIVE EXTENSION AT A DISCOUNT OF $1800:-[*143]
8.HENCE WE CLAIM FROM YOU AND YOUR PRINCIPALS THE SUM OF $1800:- PLUS $150: FOR ADDITIONAL BANK CHARGES. TLXS PHONE CALLS ETC.
ORDER AVOID UNPLEASANT CONSEQUENCES. AND MAINTAIN OUR RELATIONSHIP. SUGGEST YOU PAY ABOVE SLIMS UNQUESTIONABLY. BEST RGRDS HOURY”.
There followed a number of telexes and exchanges and eventually: an identical to No. 43 Bill of Lading No. 42 was issued on the 14th October 1980, arid the goods were shipped on “EGlZlA” from Trieste on 15.10.1980 and arrived in Limassol before the end of October.
I do not consider it necessary that I should reproduce here the rest of the telexes exchanged. What transpires, however, is that right from the start the plaintiffs insisted on their claim against the defendants, which is based on the agreement stated by the witness to have been concluded between him and the said Napolis on their behalf.
The defendants, in addition to relying on the documents adduced called only one witness, namely Andreas Michael, who is in charge of the office of defendants 3 in Nicosia in order to produce bill of lading No. 42, exhibit 3 and to be asked regarding their office practice as regards the acceptance of the cargo and the issue of a bill of lading. There was an objection to this question and the matter was not pursued any further. Asked, however, if there had been any agreement between the plaintiff Company and the late Napolis regarding this shipment and if it would be expected, according to their office practice to have a record, of such an oral agreement and his answer was that “I find no oral agreement between the late Mr. Napolis and Mr. Hourris in our file”.
It is unfortunate that Napolis died some time before the hearing of the case. What is, however, very characteristic is that the plaintiffs put forward and insisted on their claim before his death.
In fact a number of the telexes addressed to defendants 2 were marked “For the attention of Mr. Napolis” who was the[*144]person claimed to have been informed of the needs of the plaintiff regarding this shipment, their relations with the buyers of the said cargo and the condition as to the time of shipment. In respect of which they insisted as being of the essence of the contract. The death of the late Napolis has left entirely un-contradicted by any other evidence the testimony of Mr. Hourri and it is in the light of that evidence that. I have to approach the case, which is set out in the petition in paragraphs 4, 5 and 6 thereof:
“4.In or about August 1980 the Plaintiff Company through its Director and Manager approached Defendants No. 3 at their Limassol office and informed the latter and/or through them Defendants I and/or 2 that the Plaintiffs required to book shipping space from Trieste to Limassol for the carriage by sea of a cargo of Hoover Washing Machines which it was imperative that they should be shipped at Trieste on not before the 30th of September 1980 this being One of the conditions of the sale agreement concluded between the Plaintiffs and the person who was the ultimate buyer from the Plaintiffs of the said cargo, breach of which term would give to the said buyer the right either to cancel the said agreement of sale or to claim damages at the latter’s option, the relevant terms of the said agreement and especially those concerning date of shipment and exchange arrangements having been brought to the knowledge of the Defendants and/or each of them and being known to them and/or each them at the time when the agreement hereinbelow set out was entered in to.
5.As a result of the above information and the negotiations which ensued It was agreed between the Plaintiff and the Defendants and/or each one of them that they and/or each one of them should secure and/or book for the Plaintiff shipping space as aforesaid for the said cargo of the Plaintiffs from Trieste to Limassol it being also agreed for the reasons hereinabove set out which the Defendants and/or each one knew at the time of the said agreement that the said shipment of the said cargo should be effected on or before the 30.9.1980.
6 Upon the conclusion of the aforesaid negotiations and[*145]agreement Defendants No. 3 demanded and received on or about the 21.8.1980 from, the Plaintiffs the sum of C£2250 as deposit on the freight for the above carriage of the said goods”.
It has been argued on behalf of the defendants that they an exonerated from liability in view of Article 23 of the bill of lading which reads as follows:
“In the event of damage, or loss, and generally in every case for which the Company are answerable they shall only be liable for the payment of the real and intrinsic value of the goods loaded, as proved by proper invoices of origin and ascertained, by a statement of a sworn surveyor excluding any compensation in respect of damages for lost, profits or for increase of commercial value.
Should the value declared on the bill of lading be lower than that ascertained from the invoice or by the survey the Company shall, be liable for payment only on the basis of the lower value declared.
Indemnity for goods whose value has not been declared and for which the appropriate extra freight has not, been charged, may in no case exceed the amount of Lit. 200.000 per package.
Goods for which the tariff does not provide also for value tax, will have the same nevertheless imposed when the Shipper declares the value of the goods in the shipping order, if each package exceeds the minimum value of Lit. 200.000.
For the carriage of small packages, the responsibility of the Company is limited to a maximum of Lit. 70 (seven hundred and fifty) for packages up to 25 kg, to Lit 1,500 (one thousand five hundred) for those over 25 kg and, up to 50 kg, to Lit.2,500 (two thousand five hundred.) for those over 60 kg.
For the carriage of trunks of cases containing personal effects, luggage or similar, for which a bill, of lading has been issued, the responsibility of the Company is limited to a maximum of Lit. 5,000 (five thousand) for every trunk[*146]or case and Lit.1.500 (one thousand five hundred) for every piece of hand luggage.
For the special object indicated in the second paragraph of Article 2 of this bill of lading the Company shall be liable w pay the declared value on the basis of which the relative freight was collected”.
A very relevant case as far as the law governing factual situations as the present one is concerned, is that of The Attorney General (Owner of the Cargo) v. The Ardennes (Owners) [1950] 2 All E.R. 517.in which Lord Goddard,. C.J. at pp. 519-520:
“It is, I think, well settled that a bill of lading is not, in itself, the contract between the shipowner and the shipper of goods, though it has been said to be excellent evidence of its terms: Sewell v. Burdick per Lord Bramwell (10 App. Cas. 105), and Crooks v. Allan. The contract has come into existence before the bill of lading is signed. The bill of lading is signed by one party only and handed by him to the shipper, usually after the goods have been put on board. No doubt, if the shipper finds that it contains terms with which he is not content or that it does not contain some term for which he has stipulated, he might, if there were time, demand his goods back, but he is not, in my opinion, thereby prevented from giving evidence that there was a contract which was made before the bill of lading was signed and that it was different from that which is found in the document or contained some additional term. He is not a party to the preparation of the bill of lading, nor does he sign it. It is unnecessary to cite further authority than the two cases which I have already mentioned for the proposition that the bill of lading is not itself the contract, and, therefore, in my opinion, evidence as to the true contract is admissible”.
A statement of the law on the same lines and by reference to decided cases is to be found in Scrutton on Charterparties, 18th Ed., at p. 53, Article 29, which is as follows:-
“The bill of lading is not the contract, for that has been made before the bill of lading was signed and delivered,[*147]but it is excellent evidence of the terms of the contract, and in the hands of an indorsee is the only evidence. But it is open to the shipper to adduce, oral evidence to show that the true terms of the contract are not those contained in the bill of lading, but are to be gathered from the mates receipt, shipping-cards, placards, handbills announcing the sailing of the ship, advice-notes, freight-notes, or undertakings or warranties by the broker, or other agent of the carrier”.
Guided by the authoritative statements of the law and having accepted the evidence regarding the conclusion of an agreement between the plaintiffs and defendants 2 on the terms and conditions hereinabove set out and that the bills of lading issued do not contain the true terms of the contract, I find that the plaintiffs have proved their case as against defendants 1, 2 and 4, on whose behalf defendants 3 were acting as agents and against which defendants 3 the action has to be dismissed as the prerequisites that are prescribed in section, 190 of our Contract Law, Cap. 149, do not exist to render them personally bound by the, said agreement and therefore liable in damages for that.
It remains, therefore, to consider the consequences of such damages. The plaintiffs’ claim as set out in the Petition is as follows:-
“Calculation of claim based on 15 days delay
L/C documents value Stg., £35,154.
Loss in difference of exchange rate:
On 24.10.80-Stg. £35,154 @ C₤1.15.20………..C₤30,515.625 mils
On 8.10.80-Stg. £35,154 @ C₤1.19.70………….C₤29,368.421 mils
C₤ 1,147.204 mils
Freight paid on 21.8.80 C₤2,250.-
On 23.10.80 $6,600.-
On 23.10.80 $6,600 : $2.84.50 to C₤1 : …………...C₤2,319.860 mils
On 8.10.80 $6,600 : $2.87.20 to C₤1 : …………….C₤2,298.050 mils
21.810 mils
INTEREST:
15 days, on Stg. £35,154 @ 9%... Stg. £131.820:C₤1.15.20………....
114.427 mils
15 days on C₤2,250 @9%....................................................8.415 mils[*148]
On 9.10.80 damages paid by the Plaintiffs in order to prevent cancellation of the relative sale: agreement to person to whom he plaintiffs agreed to sell the said Hoovers $2.20 : $2.87.20
…767.130 mils
Telexes, Amendments to L/C. and phone calls ..70,000 mils
Total Claim……C₤2.128.986 mils”.
The question of damages under our Contract Law Cap. 149,is governed by section 73 thereof which as stated in Pollock and Mulla. Indian Contract and Specific Relief Acts, 9th Edition at p. 530 “…..… embodies the same principle as section 50 of the English Sale of Goods Act according to which the measure of damages is to be estimated’’.
Section 73 reads as follows:-
“73.(1) When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss of damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew when they made the contract, to be likely to result from the breach of it.
Such compensation is not to be given for any remote and indirect loss or damage sustained by reason of the breach.
(2) When an obligation resembling those created by contract has been incurred and has not been discharged any person injured by the failure to discharge it is entitled to receive the same compensation from the party in default, as If such person had contracted to discharge it and has broken his contract.
(3) In estimating the loss or damage arising, from a breach of contract, the means which existed of remedying the inconvenience caused by the non-performance of the contract must be taken into account”.
The notice of special circumstances brings the facts within the principles laid down in Hadley v. Baxendale, 9 Ex. 341 where the defendants did not know that the plaintiff’s mill was stopped[*149]for want of part of the machinery which they were to supply They were therefore held not liable for loss of profit but as pointed out in Pollock and Mulla (supra) p. 536.
“It may be collected from the judgment that with knowledge they would have been liable. As to the general rule there laid down see the commentary below. The loss of profits on a contract of which the defendant had not notice is clearly too remote. But where the defendant failed to supply an essential part of a machine which the plaintiff to his knowledge, was under contract to supply to a third person, and the plaintiff, by the defendant’s default, lost the benefit of that contract, the defendant was held liable both for the loss of profit arid for the plaintiff’s charges in making other parts of the machine: Hydraulic Engineering Co. v. McHaffie [1878] 4 Q.B.D. 670”.
The intention of the drafters of the Indian Contract Act was to affirm the Rule of the Common Law, laid down by the Court of Exchequer in the leading case of Hadley v. Baxendale (supra) as pointed out in Pollock and Mulla, The Indian Contract Acts (supra) at pp. 548-549:
“………..the rule laid down by it is in harmony with man other rules in our law which fixed the measure of liability by the standard of what was known to the defendant, or ought to have been then and there known to a reasonable man in his circumstances. As formulated, the rule has two branches. First, the party breaking a contract is liable for damages arising according to the usual course of things; secondly, he is liable, or also liable, for such as 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. But, as Lord Birkenhead, when a junior at the Bar, correctly pointed out, the first branch is in truth only a specification of the simpler cases under the second; for the natural and ordinary consequences of an event—namely, such as can be foreseen without any special information-are always assumed to be in the contemplation of reasonable men and it is no excuse for a man to say that he failed to think reasonably or did not think at all. [1900] L.Q.R. XVI[*150]275, 399; Cory v. Thames Ironworks [1868] L.R. 3 Q. B. 181, well illustrates the principle. P claimed damages from D for non-delivery of a floating boom derrick, which he intended to use to work machinery in the discharge of coal a, novel and highly profitable use D believed the hull was wanted to store coal the obvious use. P claimed damages merely on the basis of the obvious USC; as D had no notice of the especially profitable use. D contended no damages were payable as, the parties were not ad idem regarding the use, but the Court held that iii such a case the measure of damages is the profit resulting from the ordinary use. Followed by the C.A. in Victoria Laundry v. Newman Industries [1949] 2 K.B. 528 (supra). See also Mason v. Burningham [1949] 2 K.B. 545, C.A. (P. buys from D a used typewriter which unknown to either party is X’s property. P at once has it overhauled. P later has to return it to X. P can recover from D not merely the price paid, but also the cost of the overhaul, since the overhauling of the machine was reasonably foreseeable by D at that time of the contract))”.
On the question of currency revaluation the following is stated in Pollock and Mulla at p. 534:
“In Aruna Mills’ case (Aruna Mills Ltd. v. DhanrajmalGobindran [1962] W.L.R. 101, 111) the parties actually contemplated the possibility of revaluation during the period between the date of the contract and the date of payment for the goods as being a sufficiently serious possibility or real, danger to justify their making express provision for, that eventuality. In the circumstances they must be assumed to have contemplated that late delivery was liable to result within the rule stated in Czarnikow Ltd. v. Koufos. (See Koufos v. C. Czarnikow Ltd. [1967] 3 W.L.R. 1491; [1967] 3 All E.R. 686 (H.L.)) in the buyers suffering a loss by the payment of an enhanced price. Relying on Di Fernando v. Simon Smits & Co. Ltd. [1920] 3 K.B. 409 (C.A.) and S.S. Cellia v. S.S. volturno [1921] A.C. 544 it was argued in Aruna Mills case that losses resulting from revaluation of currencies are always too remote in law to be recoverable but this rule was not accepted by Donaldson J. who .said[*151]
‘The true rule as to losses resulting from revaluation of currencies is that changes in currencies are irrelevant if they occur after the date as at which damages fall to be assessed and are usually to be disregarded they occur on or before that date, either because the loss flowing from the revaluation has no causal connection with the breach of contract or because such loss is not within the assured contemplation o parties’ ”.
On the question of the interest again on Pollock and Mull: (supra) at p. 545 it is stated:
“Settled law, but treated as anomalous. Illustration (n@@@ to s. 73 does hot confer upon a creditor a right to recover interests upon a debt which is due to him, when he is not entitled to such interest under any provision of the law…... As observed in Jamal r. Aloof/a Dawood, Sons & Co. (1915 43 l.A. 6) s. 73 is merely declaratory of the Common Law as to damages : Bengal Nagpur Rly Co. v. Ruttanji ((1937 65 l.A. 66 at pp. 72-3) ‘The law does not regard collateral or consequential damages arising from delay in the receipt of money: Per Cur. Graham v. Campbell [1878] 7 Ch. D at p. 494. As to the liability to pay interest see p. 56 sqq., below. A gives an ijarapatta of certain property to B@@@ It is a condition of the patta that B should pay to the superior landlord the rent which A was bound to pay to him. B@@@ fails to pay the rent. The superior landlord thereupon sue@@@A for the rent, arid, in execution of the decree obtained by him in the suit, the tenure is sold. B is riot liable to A for the loss of the property, for A could have paid the rent of default by B, and saved the property from sale: Giris@@@Chandra v. KunjaBehari (1908) 35 Cal. 683.
The circumstances may, however, be such that the los@@@ is within the contemplation of the partis. In General Securities, Ltd. v. Don Ingrain, Ltd. ((1940) S.C. R. 670((Can.)) the S company had: granted to P an exclusive franchise to see S cars in Vancouver. D agreed to furnish P with the necessary credit to finance the purchase of that cars, but later refused to make an advance, and S cancelled P’s franchise. The Supreme Court of Canada held d@@@ liable for the loss of franchise and. loss of profits, as natura[*152]and probable results of the breach within, the contemplation of the defendant.”
The evidence for the plaintiff Company in respect of the damage suffered turned first on the 2% by way of damages paid by them in order to prevent cancellation of the relevant sale agreement to the person to whom they had agreed to sell the said Hoover which calculated at the rate of exchange of 287.20 per dollar, makes a total of C₤767.130 mils.
On the findings already made by me and in the light of the legal principle pertaining to such facts, namely, that the defendant would be liable for damage resulting from special circumstances when those special circumstances have been brought home to him in such a way as to show that he has accepted or is taken to have accepted the risk, as it is in this case, I allow this amount as not only the parties contemplated that the damage resulting from, the special circumstances might occur, but they further contemplated that the defendant was taking the risk of being liable for such consequences should it occur. (See McGregor on Damages, 14th Ed., para, 201, P. 144 and RobophoneFqcilities v. Blank [1966] 1 W.L.R. 1428 at p. 1448 (C.A.) per Diplock L.J.
The next item to which the plaintiffs’ witnesses referred was that of telexes, amendments to L/C and phone calls to the total cost of C£70.- which obviously was too small an amount to have been questioned by the defendants. Another item is the difference in the freight paid amounting to C₤21.810 mils.
As regards the interest claimed, in the absence of any provision of the law and on the facts of this case, I find that this item cannot be recovered by the plaintiffs as it is generally presumed not to be within the contemplation of the parties at the time of making the contract and’ there is nothing to point out to the contrary.
On the question of the difference in the rate of exchange, as a result of which the plaintiffs claim to have suffered damage amounting to £ 1147.204 mils, plaintiffs witness has stated that this arose because had he paid the value Of the goods on the 8th October 1980, when Egizia arrived in Cyprus and the letter of credit would have been made good, he would have paid the[*153]figure appearing in the particulars of damage opposite that date, whereas on account of the delay of 16 days in their arrival he had to pay the amount due in sterling but at a .different rate of exchange which compelled him to pay the figure opposite that date and the difference between the two figures is the amount claimed. In other words the rate of exchange between the Cyprus and the English pound had changed unfavourably for the plaintiffs. He went further to say that he had informed Mr. Napoleon that the letter of credit would be opened in favour of the suppliers Hoover Ltd in English pounds which meant that there should be a conversion of Cyprus pounds into English pounds.
As already pointed, out in the Aruna Mills case (supra) Donaldson J., dealt with the matter and I have briefly referred already to the rule he has adopted in the case in answer to the argument of counsel in that case that there is a special rule that losses resulting from revaluation of currencies are always too remote in law to be recoverable, reliance placed for that proposition upon D. Ferdinando v. Simons Smit’s& Co. Ltd., [1920] 3 K. B. 409; and S.S. Celia v. S.S. Volturno [1921] 2 App. Cases 544.
In the present case it is not clear that the parties actually contemplated the possibility of revaluation during the period between the date of the contract and the date of payment for the goods as being of sufficiently serious possibility or real danger to justify their making express provision for that eventuality. In the absence of such an express provision and bearing in mind the other circumstances of this case. I cannot assume that the parties have contemplated that late delivery was liable to result in the buyers suffering the loss by the payment of an enhanced price. The mere statement f the plaintiffs witness that he had told the late Napoleon that he was paying in sterling could not, to my mind sufficient to bring this case within the rule as stated in the Aruna case (supra) whereby by adopting the test of “liable to result” within the rule stated in the Czarnikow case (supra) explaining Hadley v. Baxendale (supra), the loss resulting from the revaluation of currency was considered in that case as not too remote to be recoverable.
I shall not therefore allow this amount as, damages recoverable in the light of the facts and, circumstances of this case and the Law as above explained. No doubt the difference in the freight[*154]paid to the defendants amounting to £21.810 mils is also recoverable.
For all the above reasons there will be judgment for the plaintiffs against defendants 1, 2 and 4 jointly and severally for £858.94 mils with legal interest and costs.
Case against defendants 3, dismissed with no order as to costs.
Judgment against defendants 1, 2 and 4 for£858.940 mils. Case against defendant 3dismissed. Order for costs as above.
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