HOLMES LIMITED v BUILDWELL CONSTRUCTION COMPANY LIMITED (1973) Z.R. 97 (H.C.

HIGH COURT

BRUCE-LYLE, J

15TH MARCH ,1973

(CIVIL CASE NO. HN 303 OF 1972)

Flynote

Contract - Variation of written agreement by extrinsic evidence.

Contract - Breach - Rights of aggrieved party.

Headnote

The plaintiffs agreed in writing to hire a grader to the defendants. The terms of this agreement included
a clause to the effect that the plaintiffs would provide a driver. The grader was delivered to the
defendants but no driver was provided. The defendants repudiated the contract about one month later.
The plaintiffs alleged that it had been verbally agreed between the parties that the defendants would
provide transport so as to enable the plaintiffs' driver to reach the place where the grader was to be
operated. The plaintiffs further alleged that the defendants failed to provide the transport and thereby
were in breach of the contract. The plaintiffs claimed damages for the hire of the grader. The defendants
counterclaimed for breach of contract by the plaintiffs in failing to provide a driver.

Held:

(i) Where the parties have embodied the terms of their contract in a written document, extrinsic
evidence is not generally admissible to add to, vary, subtract from or contradict the terms of the written
contract.

(ii) By way of exception to the above rule, extrinsic evidence may be admitted to show that the
written instrument was not intended to express the whole agreement between the parties.

(iii) In order to invoke the exception the burden of proof was in this case upon the plaintiffs.
(iv) Any discussion of verbal conditions before the written agreement was completely superseded
by the written document.

(v) Since the written agreement did not provide that the defendants should provide transport for
the driver the latter had no obligation to do so and the plaintiffs were in breach of their contract by
failing to provide the driver. Their claim for the hire price therefore failed.

(vi) If a party indicates before the time of the contract that it will not fulfil its obligations the other
party may either repudiate the contract forthwith and sue for damages or wait until the time of
performance and then sue.

(vii) The defendants were justified in repudiating the contract and were entitled to succeed in their
counterclaim.

(viii) As the defendants did not repudiate at the time of performance but delayed exercising their
right until after one month they were entitled to nominal damages only.

Case cited:

(1) Mercantile Bank of Sydney v Taylor (1893) A.C. 317.

For the plaintiffs: H.Smallwood, H.K. Smallwood and Co.

For the defendants: M.Musuku, Musuku and Co.

Judgment

BRUCE-LYLE, J.: Plaintiffs' claim against defendants is for K3,240.00 for hire of a Champion grader. The
Statement of Claim set out the particulars of the claim as follows:

"4-1-72 Hire charge for December, 1971, as per Invoice

 No. 4202 .. .. .. .. K1,500 15-1-72 Hire charge for
January, 1972, as per Invoice

No. 4205 .. .. .. .. K1,740

.. .. .. .. .. K3,240''

Defendants in the Statement of Defence admit having agreed to hire the grader but state that at the
time of the contract it was agreed that plaintiffs should provide an operator for the grader, that the
plaintiffs'

operator did not turn up and the keys of the grader were never handed to the defendants. In effect the
defence is that plaintiffs were in breach of the agreement and are therefore not entitled to their claim.
Defendants have counterclaimed for:

(1) Special damages of K8,000 being loss of income for two months at the rate of K4,000 per month;

(2) General damages for breach of contract.

Counsel for defendants in his submissions has abandoned the claim for special damages.

Plaintiffs' case is that they agreed with defendants' agent, Mr Glomez, to hire to the defendants a
Champion grader which was to be brought by road from Lusaka to a site on Kitwe/Ndola road for the
use by defendants on a job they were undertaking on the road. Negotiations for the hire of the grader
resulted in a letter from the defendants dated 3rd December, 1971, asking the plaintiffs to supply the
grader.

The terms of the agreement were reduced in writing by the plaintiffs and signed by Mr Gomez on behalf
of the defendants (letter dated 11th December, 1971 - Exhibit B). One of the terms reads as follows:

"(2) Operator will be provided by us."

Plaintiffs' Managing Director, Mr Ian Wallace Gracie, said in evidence that during the negotiations and
before he reduced the terms into writing (Exhibit B) he agreed with Mr Gomez that defendants would
pick up the plaintiffs' operator every morning from the operator's house and return him on completion
of the day's work. He said Mr Gomez agreed to undertake this duty for the defendants because he, Mr
Gomez, travelled from Ndola to the site on the Kitwe/Ndola road every day and back. This alleged
additional term was not embodied in the written terms (Exhibit B).

The grader was driven from Lusaka and arrived on the site on the 21st December, 1971. From that date
up to 13-1-72 defendants did not use the grader on their job because plaintiffs' operator never turned
up on the site. Defendants could not operate the grader because the keys were with the plaintiffs. Mr
Gracie said in evidence that between these dates he did not send the operator to the site to operate the
grader because Mr Gomez never turned up to pick the operator to the site.

On 12th January, 1972, plaintiffs wrote to the defendants:

"Dear Sir,

Re: Hire of Champion Grader

We note that you do not appear to be using this grader which was brought up from Lusaka for
you on 20th December, 1971. We have to remind you that the hire charge is payable for every day it is
available for your use and whether it is actually used or not.

When you require our driver, and the machine is to be put to use, please advise our office at
telephone Mufulira 2488, or phone our Mr Gracie at Ndola 70726, as previously advised to your office.

Yours faithfully,

P. W. HOLMES LTD.

On 15th January, 1972, plaintiffs' agent wrote to the defendants:

"Dear Sir,

Re: Hire of Champion Grader

We wish to acknowledge receipt of advice from your Mr Gomez at 9.00 a.m. on the 13th
January, 1972, that this grader is no longer required by yourselves.

The grader has been collected and returned to Lusaka as arranged and we are attaching copy of
our Invoice No. 4205 and Statement for the hire of this machine.

Yours faithfully,
 P. W. HOLMES LTD.''

Plaintiffs have produced the Invoices Nos 4202 for K1,500 and 4205 for K1,740 in support of their claim.
Mr Gracie in his evidence said that during the negotiations it was agreed to charge for the use of the
grader on' Public Holidays and Sundays.

Mr Ernest Chiwama defendants' Managing Director, in his evidence admitted hiring the grader and also
admitted that the terms of the hire are those contained in the letter Exhibit B. He said he was not aware
of the condition that Mr Gomez, on behalf of the defendants, was to collect the operator to the site
every morning and to take him back to Ndola at the end of the day's work. He said Mr Gomez stayed 21
miles from Ndola on the Ndola/Kabwe Road and used to travel to the site on the Kitwe Road via the by-
pass from Kabwe Road to Luanshya and therefore could not have agreed to pass through Ndola every
morning to collect the operator to the site.

He also denied that his company agreed with the plaintiffs to pay for the hire of the grader on Sundays
and Public Holidays. He said this condition was not in the letter Exhibit B.

As I have already stated it is the defence that plaintiffs failed to provide the operator as agreed and
made it impossible for the defendants to use the grader and therefore defendants were in breach of the
agreement and not entitled to their claim.

Before plaintiffs can succeed on their claim this Court would have to decide whether the terms of the
agreement included the conditions that defendants were responsible to provide transport for the
operator to the site and back every day and also that defendants were to pay for the use of the grader
on Sundays and Public Holidays.

The alleged agreed conditions were verbal and were supposed to have been agreed upon during the
negotiations between Mr Gracie for the plaintiffs and Mr Glomez for the defendants before the terms
and conditions were reduced into writing (Exhibit B). Defendants have denied any knowledge of these
verbal conditions. Are these verbal conditions part of the agreement between plaintiffs and defendants
for the hire of the grader?

I have no doubt in my mind that Mr Gracie, plaintiffs' Managing Director, is an experienced businessman
and if there was an agreement on the alleged conditions he would not have forgotten to include those
conditions in the written memorandum (Exhibit B). He has not given any tangible reason for his failure to
do so and there is no evidence that he and Mr Gomez agreed not to have those conditions included. Mr
Chiwama, defendants' Managing Director, has denied any knowledge of an agreement on those
conditions. I have no hesitation whatsoever in finding as a fact that there was no such agreement
between Mr Gracie and Mr Gomez that defendants would be responsible for transporting the operator
to and from the site and also that there should be charges for the use of the grader on Sundays and
Public Holidays.

Where the parties have embodied the terms of their contract in a written document, the general rule is
that extrinsic evidence is not admissible to add to, vary, subtract from or contradict the terms of the
written contract. There are however exceptions to this rule and learned Counsel for plaintiffs has relied
on one of the exceptions that extrinsic evidence maybe admitted to show that the instrument was not
intended to express the whole agreement between the parties. (Chitty on Contract 23rd Edition, Vol. I,
para. 620.) In the case of Mercantile Bank of Sydney v Taylor [1] their Lordships stated at page 321:

"It had been proved that the whole terms of the agreement under which Griffin became entitled
to his release were embodied in the bank's letter of the 5th April, 1889, which he accepted without
reservation or qualification. On that assumption, it is plain that the previous verbal communications
which had passed between him and the bank were completely superseded, and could not be
legitimately referred to, either for the purpose of adding a term to their written agreement, or of
altering its legal ordinary construction."

In the present case it is the case for the plaintiff to show that the verbal conditions were discussed and
agreed upon by Mr Gracie and Mr Gomez before the written memorandum (Exhibit B) was prepared by
Mr Gracie for Mr Gomez's signature and these conditions were never embodied in the written
memorandum. If it was the intention of the parties that these conditions be part of the agreement, I do
reiterate that I do not see how Mr Gracie could have left them out in the written memorandum. I am
satisfied that even if there were discussions about these conditions the verbally agreed conditions
between Mr Gracie and Mr Gomez were completely superseded and cannot be legitimately referred to
for the purpose of adding those conditions or terms to the written agreement.

These alleged verbally agreed conditions not forming part of the written agreement the next issue to
decide is whether plaintiffs' failure to provide the operator for the grader was a breach of contract. I am
of the view that the condition that the plaintiffs were to supply the operator is the most important of all
the conditions as without the operator defendants could not have used the grader in any manner for the
job for which they hired the grader. It is the law that "If, before the time arrives at which is bound to
perform a contract, he expresses an intention to break it or acts in such a way as to lead a reasonable
person to the conclusion that he does not intend to fulfil his part this of itself entitles the other part, to
take one of two courses. He may treat the renunciation as discharging him from further performance
and sue for damages forthwith, or he may wait till the time for performance arrives and then sue."
(Chitty on Contract, 23rd Edition, Vol. I, at para. 1339.) Here plaintiffs' omission to provide the operator
is an act which justifiably, and reasonably led the defendants to the conclusion that plaintiffs had no
intention to fulfil their part of the contract. In the circumstances I find that defendants were right in
treating the contract as at an end right from the beginning.

I therefore have no other option but to come to the conclusion that plaintiffs cannot succeed on their
claim. On the other hand I find that defendants are entitled to succeed on the counterclaim for damages
for the breach of the contract by the plaintiffs.

Defendants, however, waited until the 13th January, 1972, before asking the plaintiffs to tale away the
grader from their site. The grader was sent to the site on 21st December, 1971, and when they found
that an operator was not being provided they could have asked the plaintiffs to remove the grader long
before the 13th January', 1972, and therefore although they are entitled to damages for the breach of
the contract, I am of the view that the damages are to be nominal.

I therefore dismiss the claim of the plaintiffs and enter judgment for the defendants on their
counterclaim for damages for the breach of contract by the plaintiffs in the sum of K500 with costs.

Judgment for the plaintiffs