[1951] EACA 4

## **COURT OF APPEAL FOR EASTERN AFRICA**

### Before SIR BARCLAY NIHILL, President, SIR G. GRAHAM PAUL, C. J. (Tanganyika), and LOCKHART-SMITH. J. of A.

#### HARI SINGH, Appellant (Original Defendant)

# $\mathbf{v}$

## GENERAL WORKSHOP, Respondent (Original Plaintiff). Civil Appeal No. 36 of 1950

(Appeal from the decision of H. M. Supreme Court of Kenya-De Lestang, J.) Entire contract—Failure to perform stipulation—Whether completion according to contract a condition precedent to right to any payment.

The defendant-appellant contracted with the respondent for a chassis body to be made of a certain hardwood; it was not so made; the appellant rejected the body and counterclaimed for detention by the respondent.

Held (5-2-51).-(1) Where there is an entire contract to do work according to specification for a lump sum nothing can be recovered until the work is completed according to the contract, even if the work is constructed of better materials than those stipulated for, the contractor would not be able to recover.

(2) Completion (according to the contract) is a condition precedent to the right to payment except in the case of acceptance, waiver or evidence of a new contract to pay for work performed.

Cases referred to: Forman & Co. Proprietary, Ltd. v. The Ship "Liddesdale", L. R. (1900) A. C. 190; Ujagar Singh v. H. A. Murray, 17 E. A. C. A. 8 (Civil Appeal No. 27 of (1900) A. C. 190; Olagar Singh V. R. A. Marray, 17 E. B. C. B. 8 (Strin Appeal Ro. 27 ol.<br>1949); Munro v. Butt (1858) 8 E. & B. 738; Whitaker v. Dunn (1886) 3 T. L. R. 602;<br>Thornton & Anr. v. Place (1832) 174 E. R. 74; H. Dakin &

Nazareth for the appellant.

Mackie-Robertson for the respondent.

JUDGMENT (delivered by LOCKHART-SMITH, J. of A.).—This is an appeal from a decision of the Supreme Court of Kenya giving judgment for the present respondents for Sh. 1,200, and dismissing the counterclaim of the present appellant.

The dispute between the parties arose from the following circumstances:—

The appellant was the owner of a lorry with a steel body. He wished to replace this body with a lighter body, in order that he might carry heavier loads. He therefore removed the steel body, and entered into a contract with the respondents for the building of a new body to be made of wood.

The respondents (the original plaintiffs) alleged in the Court below that this contract was for the building of a body comprising a chassis made of a wood known as Mwesi with a floor made of camphor wood. Whilst the body was still under construction, the appellant called at the respondents' workshop and informed them that as he intended to use the lorry for the transport of stone, the floor ought to be strengthened by a covering of metal sheeting. This was agreed to and done. The price agreed between the parties for the body was Sh. 1,200, and for the metal sheeting Sh. 330. These sums the respondents claimed, together with storage charges in respect of the lorry at the rate of Sh. 10 per diem on account of the failure of the appellant to remove it from their premises on completion of the contract work.

$\hat{f}$

The appellant (the original defendant), alleged that the contract was of a totally different nature. He claimed that it was for the construction of a body to be made of Mwesi and another wood known as Msharagi at an agreed price of Sh. 800. On discovering that camphor wood was being used for the floor, he objected, and did not agree to the suggestion of the respondents that his objection would be met if the floor were covered with iron sheeting. He claimed that he had tendered the true contract price of Sh. 800 to the respondents before action and he brought this sum into Court. In his evidence he stated that he did not take the lorry because the work was not according to contract, and by his advocates' letter of 10th September, 1949, (ex. 1 $(d)$ ), written before the plaint was filed (29th September, 1949) he rejected the work in toto. He counterclaimed for damages at the rate of Sh. 75 per diem in respect of the detention of his vehicle by the respondents. It was in fact detained by them from 11th August, 1949, when as they alleged, it was ready for delivery (paragraph 1 of the plaint) until it was released on 23rd November, 1949, under an arrangement come to between the advocates of the parties. (See cross-examination of Ratan Singh, P. W.1, and exhibits 1 $(g)$ , 1 $(i)$ , 1 $(j)$ and 1 $(k)$ .) This detention was made in purported exercise of a lien—see paragraphs 5 and 6 of the reply, and the respondents' advocate's final address in the Court below.

There is no precise evidence on the point, but from a perusal of the pleadings, exhibits, arguments and judgment in the Court below, it appears that the case proceeded on the common assumption that Mwesi and Msharagi are hardwoods, that camphor wood is a soft wood, and that the gravamen of the appellant's complaint was that the floor of the new body was made of camphor wood, instead of Msharagi as specified in the contract.

The contract was an oral one, both parties thereto being illiterate. If they had had the wisdom to arrange for the contract to be reduced to writing, this litigation would probably have been avoided.

The learned trial Judge, when he came to make a decision, was obviously in some difficulty. He was of the opinion that there had been a great deal of lying in the case, and that complete reliance could not be placed on the oral evidence. Nevertheless, after some hesitation, he arrived, in effect, at the following findings: -

- (a) that the agreed contract price was Sh. $1,200$ as alleged by the respondents, and not Sh. 800 as alleged by the appellant; - (b) that the contract was for a hardwood floor, and that the respondents committed a breach of contract in putting in a softwood floor; - (c) that the appellant did not agree that the softwood floor should be $(c)$ reinforced by a covering of iron sheeting, and that no cost for such sheeting was ever agreed between the parties.

The learned Judge therefore gave judgment for the respondents for Sh. 1,200, i.e. the agreed price of the body as found less the cost of the iron sheeting. He dismissed the respondents' claim for storage charges, because they had claimed more than they were entitled to. He also dismissed the appellant's counterclaim for damages for detention of the lorry because he had been only prepared to pay less than the agreed price.

Mr. Nazareth, for the appellant, submitted that, as the respondents had never performed the contract, the appellant was not liable to pay anything thereunder. The work done by the respondents in purported performance of the contract, had been rejected in toto by the appellant, and the latter had never entered into any substituted contract. In the absence of a new contract, there was no liability on the appellant to pay for substituted work.

He relied for this proposition on Forman & Co. Proprietary Limited v. The Ship "Liddesdale", L. R. (1900) A. C. 190. That suit was in form a proceeding in the Vice-Admiralty Court to make the ship answerable for the cost of repairs executed upon her, but as Lord Hobhouse said at the commencement of their Lordships' judgment at page 194, in substance it did not differ from other litigations between one who has done work on a chattel and the owner of the chattel who denies his liability to pay for it. There was also at issue in that case the question of the authority of an agent to order certain repairs, which is irrelevant to the present case.

The effect of the decision in Forman's case was that where there is an entire contract to do work according to specification for a lump sum, nothing can be recovered until the work in completed. (Halsbury, 2nd edition vol. 3 paragraph 362, pages 214 and 215, and footnote $(n)$ on the latter page.) Halsbury also relies on Forman's case (correctly, in my opinion) as authority for the following propositions: —

"If a contractor without authority from his employer constructs the work of better materials than those stipulated for in the contract, the employer might refuse to accept the work, in which case the contractor would not be able to recover at all, as he would not have performed his contract." (Vol. 3, paragraph 370, page 218.)

"An allegation that the building owner has received something as good as what he bargained for will not enable a builder to recover the contract price, in the case of an entire contract, in which completion is a condition precedent to the right to payment, except in the case of acceptance by the employer, waiver, or evidence of a new contract to pay for the work actually performed." (Vol. 3, paragraph 372, page 218.)

And again-

"If the contract is to do an entire work for a specific sum, the person employed can recover nothing unless the work is completed, and unless, when completed, it is the work stipulated for in the contract." (Vol. 34, paragraph 523, page 462.)

Mr. Nazareth also referred to the decision of this Court in *Ujagar Singh v*. H. A. Murray, Civil Appeal No. 27 of 1949. In that case the employer (the respondent) denied liability to pay any part of an instalment of the lump sum price agreed under a building contract, because he alleged that the contractor was in breach of a condition precedent to payment, namely, that the work should at each stage be completed "to the satisfaction of the employer", and in respect of the particular instalment in issue, that payment should be due only "when the buildings and alterations are completely finished". The learned trial Judge found that there had been a breach by the contractor of a condition precedent, and dismissed his claim for payment of the instalment. This Court by a majority dismissed the contractor's appeal, Edwards, C. J., remarking that it seemed clear to him that completion in accordance with the contract was a condition precedent to payment, and citing the following passage from Hudson's "Law of Building Contracts", 6th edition, page 177 (see now the 7th edition, page 180):-

"Where completion in accordance with the contract is a condition precedent to payment, no English case has yet decided that any allegation of 'substantial performance' will enable the builder to recover, unless there is some act of the employers, such as acceptance, waiver or prevention, or evidence from which a new contract can be implied to pay for the work as performed and according to value, although it is not entirely completed. (Munro v. Butt (1858), 8 E. & B. 738; Whitaker v. Dunn (1886) (in actual fact 1887) 3 T. L. R. 602.)

A distinction might be drawn between a defect in performance, consisting of bad work, or work varying from the specification, which would have to be removed and replaced in order to render it according to the contract, and a mere trivial omission, such as the locks on the door, which could be easily added at a small cost." (cf. Halsbury, Vol 3, paragraph 372 $a$ uoted above.)

He could not find from the record any evidence of acceptance, waiver or prevention, or any evidence from which a new contract could be implied to pay for the work as performed and according to value, although it was not entirely completed. Equally, in my opinion, no such evidence can be found in the present case.

Mr. Nazareth submitted that if the principle applied by this Court in Civil Appeal No. 27 of 1949 was applicable to the facts of the present case, this Court as at present constituted was bound to follow its earlier decision.

In my opinion the earlier decision is applicable to the present appeal, and we are bound to follow it.

Halsbury, 2nd edition, summarizes the position as regards the Court of Appeal in England as follows: -

"The Court of Appeal is bound to follow previous decisions of its own as well as those of Courts of co-ordinate jurisdiction, and in this respect a full Court has no greater powers than a division of the Court. The only exceptions to this rule are—

- (1) the Court is entitled and bound to decide which of two conflicting decisions of its own it will follow; - (2) it is bound to refuse to follow a decision of its own which, though not expressly overruled, cannot, in its opinion, stand with a decision of the House of Lords; - (3) it is not bound to follow a decision of its own if it is satisfied that the decision was given per incuriam."

(Vol. 19, paragraph 556, and notes $(u)$ and $(a)$ thereto, as revised in the Cumulative Supplement for 1950.)

I apprehend that similar principles apply to the decisions of this Court in its civil jurisdiction subject to such necessary modifications as the substitution of "the Privy Council" for "the House of Lords". None of the exceptions specified above are applicable, and therefore, in my view, the decision in Civil Appeal No. 27 of 1949 must be followed.

Mr. Nazareth also referred to Whittaker v. Dunne (1887) 3 T. L. R. 602. In that case a Divisional Court of the Queen's Bench decided that where there was a special contract, and work had been done under it not according to the contract, an intention might still be inferred to waive the special contract and pay according to value. But there had to be some evidence from which such an intention could be inferred, and on the facts of the case, the Court held that there was no such evidence. In particular, the Court held that though the work done (which, as the defendant's counsel said, the defendant in the circumstances could not help using and in a sense accepting) was not wholly useless, and that the defendant had derived some benefit from it, yet this was not sufficient to show a fresh contract to pay for the work as it was done. Mr. Nazareth contended that in the present case also there was no evidence from which a contract to pay for the work as actually done could be inferred. In my opinion, that was a correct contention.

In the alternative, but only in the alternative (see Ground No. 3 of the Memorandum of Appeal) Mr. Nazareth relied on *Thornton and Another v. Place* (1832) 174 E. R. 74, the headnote to which reads: -

"When a Tradesman finishes work differing from the specification agreed on, he is not entitled to the actual value of the work, but only to the agreed price, minus such a sum as it would take to complete the work according to the specification."

On the basis of the learned Judge's finding that the agreed price was Sh. 1,200 including a hardwood floor, Mr. Nazareth submitted that the appellant has tendered to the respondents more than the amount required to complete the work according to specification, and the learned Judge ought, therefore, to have awarded damages to the appellant as claimed in his counterclaim. Finally, Mr. Nazareth referred to paragraph 734, at page 580, of Vol. 20 of the 2nd edition of Halsbury dealing with the remedy of a legal lien, and submitted that any claim of the respondents to exercise such remedy was defeated by the appellant's tender of more than the due amount.

Having regard to the opinion which I have formed, however, it is not necessary for me further to examine this alternative ground of appeal.

Mr. Mackie-Robertson for the respondents, suggested that the learned Judge's findings that—

- (a) "the defendant (now appellant) must have known when he placed the order to which use he would put his lorry and I do not find the evidence (i.e., as was agreed, the respondents' evidence) relating to his choice of floor very convincing"; - (b) the contract was for a hardwood floor; and $(b)$ - (c) that the iron sheeting was put in by the respondents in order to repair. their omission to use hardwood as specified—

were not supported by the evidence. In my opinion, there was evidence upon which the learned Judge was entitled to reach these findings, and this Court, sitting as an appellate tribural, ought not to disturb them.

Mr. Mackie-Robertson also contended that the fact that the appellant had tendered and brought into Court the sum of Sh. 800, showed that he was willing to accept the lorry and pay that price for it. Therefore, there had been no total rejection of the work done. Paragraph 5 of the defence, alleging rejection *in toto* of the work done, was denied by paragraph 2 of the reply.

Having regard to the evidence of the appellant on the point already referred to, to exhibit 1 $(d)$ , and to the finding of the learned Judge that he was not satisfied that the defendant (appellant) agreed to the error (i.e. the substitution of a softwood for a hardwood floor in breach of the contract specification) I have no doubt that the work was in fact rejected by the appellant. The appellant's tender was not accepted by the respondents, and as Mr. Nazareth, replying to Mr. Mackie-Robertson's argument pointed out—quite rightly in my opinion—the respondents cannot in these circumstances allege or imply a new contract to accept any pay for the work actually done, especially as no such new contract was never pleaded, or contended for in the Court below.

Mr. Mackie-Robertson next referred to the end of paragraph 306 of Vol. 7 of the 2nd edition of Halsbury at page 224.

"The test which is now applied is whether the particular stipulation goes to the root of the matter, so that a failure to perform it would render the performance of the rest of the contract by the party in default a thing different in substance from what the other party has stipulated for, or whether it. merely partially affects it and may be compensated for in damages."

This was one of the two passages from Halsbury cited by the learned Acting President in his dissenting judgment in Civil Appeal No. 27 of 1949. The other was taken from paragraph 304 at page 223 of the same Volume.

$\ldots$ the non-performance of a promise which is a condition precedent releases the other party from his obligation to perform the contract, unless he has received a substantial part of the consideration for his promise, in which case he can only recover damages for breach of the other's promise."

(I note that, in the copy of the Acting President's judgment which has been made available to me, this latter passage is not quite accurately quoted, although the departures make no difference at all to the meaning.) The majority of this Court did not accept the learned Acting President's application of these passages to the facts of Civil Appeal No. 27 of 1949.

Mr. Mackie-Robertson then cited H. Dakin & Co. Limited v. Lee, L. R. (1916) 1 K. B. 566, with special reference to the second paragraph of Ridley, J.'s judgment in the Divisional Court at page $569$ :-

"It seems to me, however, from the authorities that where a building or repairing contract has been substantially completed, although not absolutely, the person who gets the benefit of the work which has been done under the contract must pay for that benefit. On the other hand, if the builder has refused to complete his work, or if the work done is of no use to the other party, or if the work is something entirely different from what was contracted for, then the builder can recover nothing. In the present case the work was in my opinion, as I have said, substantially completed. It was not entirely different from what has been contracted for, and it was certainly of use to the defendant as is shown by the fact that, as appears from the correspondence, she was willing to pay £250 for it."

Dakin's case was the authority principally relied on by the Acting President in his dissenting judgment already referred to. In the first place, as Mr. Nazareth rightly pointed out, the passage cited by Mr. Mackie-Robertson was from a judgment in the Divisional Court, which passage, together with the immediately preceding paragraph (which was cited by the Acting President in the said dissenting judgment) is substantially reproduced in the headnote to the case at page 566. There was, in fact, a second appeal to the Court of Appeal, the report of which commences at page 577. In Vigers v. Cook, L. R. (1919) 2 K. B. 475. Bankes, L. J., in his judgment in the Court of Appeal made the following observation (page $483$ ):-

"I wish to add one word with regard to Dakin and Co. v. Lee. I merely desire to point out that the headnote, while it purports to be a headnote of the decision in the Court of Appeal, is in fact a headnote, and an accurate headnote, of the decision in the Divisional Court. The decision in the Court of Appeal proceeded upon different grounds from those in the Divisional Court, and therefore I think that the headnote must not be considered as being an epitome of the decision in the Court of Appeal."

In the second place, Dakin's case was not accepted by the majority of this Court as an authority relevant to the facts of Civil Appeal No. 27 of 1949. Nor is it, in my opinion, relevant to the facts of the present appeal. I confess that I find the decision in *Dakin's* case difficult to understand. In *Eshelby v. Federated* European Bank, Ltd., L. R. (1932) 1 K. B. 423 (a decision of the Court of Appeal some 16 years later in date than its decision in Dakin's case) Greer, L. J. said at page $431:$ —

"... if H. Dakin & Co. Ltd. v. Lee lays down a principle of law it seems to be contrary to a long series of cases ever since Cutter v. Powell, which

decided that where work is to be done for a named sum neither that sum nor any part of it can be recovered while the work remains undone. I should not like to decide the case upon this point without further time for consideration of the question how $H$ . Dakin & Co. Ltd v. Lee is to be reconciled with *Cutter* $\vec{v}$ . *Powell.*"

I agree with the observation of Rudd, J., at the end of his judgment in Civil Appeal No. 27 of $1949$ :

"With great respect, I do not think that *Dakin v. Lee* establishes a legal principle of such general application as the judgment just delivered by the President (i.e. the dissenting judgment) suggests ..."

Dakin's case is not cited by Halsbury in connexion with either of the passages from Halsbury cited by the learned Acting President, and both passages must be read subject to, and reconciled with, the other passages from Halsbury founded upon *Forman's* case which I have quoted earlier in this judgment.

Halsbury does refer to Dakin's case in one of those other passages (see paragraph 372 of Vol. 3 at pages 218-9 and footnotes $(g)$ $(h)$ on the latter page) and in the following terms: -

"It would seem, however (the italics are mine) that the rule in the case of building contracts is . . . that such non-essential and trivial defects on the side of one party as can be compensated for will not excuse the other party to the contract. In every case it must be a matter of degree and depends on whether the defects or omissions amount only to a negligent performance of the contract and not to an abandonment or failure to complete it."

That, in my opinion is, in a nutshell, what *Dakin's* case really decided. In other words, Dakin's case is only a comparatively minor qualification of the principle laid down in *Forman's* case, and is so treated by Halsbury.

There is no evidence before us as to the value of the floor of the lorry in relation to the value of the whole body contracted to be built, but it seems only commonsense to assume that the floor must represent a substantial portion of the whole value. Ratan Singh, a partner in the respondent firm (P. W.1.), stated that if the whole body had been made of hardwood (Mwesi)—that is if the floor as well as the chassis had been made of Mwesi—he would have charged Sh. 500 or Sh. 600 more than his firm has actually claimed. I consider that, on the learned trial Judge's findings, there has been a substantial failure to complete the contract according to specification, and that the respondents cannot, therefore, recover anything.

I agree with Mr. Nazareth's submission that the present contract ought to be treated as in the same category as the contract in *Forman's* case. It is not, as he said, comparable to a contract for the supply of consumable stores. As Lord Hobhouse said in Forman's case:-

"The mere fact that the defendant took the ship which was his own property and made the best he could of it cannot give the plaintiffs any additional right. It is not like the case of an acceptance of goods which were not previously the property of the acceptor." (Page 204.)

Mr. Mackie-Robertson complained that the defendant (appellant) was "trying to get something for nothing", and Mr. Nazareth was asked by the Court in the course of argument whether that was not the case, and whether, if that was the case, such a result was not somewhat remarkable? Mr. Nazareth admitted that his client was obtaining for nothing what he had valued at Sh. 800, but added that this was only because the respondents had failed to carry out the contract.

In my view, that was a correct and sufficient answer. To quote Lord Hobhouse once more: -

"It seems hard that the plaintiffs should not be paid for the work which they have done; but such is the effect of contracting to work for a lump sum and failing to do the work. It would be hard upon the defendants if they were made to pay for work which they did their best to prevent." (*Forman's* case, page 205.) $\frac{1}{2}$

And in Whitaker v. Dunn Lord Coleridge said that there was nothing hard or unjust in giving judgment for the defendants, for men should perform their contracts (page $603$ ).

There only remains the question of the counterclaim. The respondents, having failed to carry out the contract, had in my opinion, no shadow of right to detain the appellant's lorry. He is, in my view, entitled to damages for such detention, but I do not consider it to be necessary or desirable for this Court to assess the damages.

I would allow the appeal with costs, set aside the judgment of the Supreme Court, and substitute a judgment for the appellant on the claim with costs, and for the appellant on the counterclaim, the amount of the damages and the question of costs on the counterclaim to be decided by the Supreme Court.

SIR BARCLAY NIHILL, President.—I agree with the judgment which has just been delivered by my learned brother, the Justice of Appeal and have nothing to add. An order will be made in the terms he has proposed.

SIR GRAHAM PAUL, C. J. (Tanganyika).—I have had the privilege of reading the judgment of my brother Lockhart-Smith. His Lordship in his judgment has set out very fully the facts and the rival cases of the two parties and I need not repeat what he has said.

My view of this appeal may be quite shortly stated. It is that this case is governed by the decision of this Court in Civil Appeal No. 27 of 1949 Singh $v$ . Murray. That I dissented from that judgment is, of course, no good reason for my not following it when I find myself as a member of this Court faced with the same question of law in a subsequent case.

It is also my view that the principles upon which this present appeal should be decided are the same as those on which the case of Dakin & Co. Ltd. v. Lee was decided. This Court, however, by its decision in Singh v. Murray has in my definite view held that the Court of Appeal was wrong in its decision in the case of Dakin & Co., Ltd. v. Lee. In my opinion this Court is not bound by decisions of the Court of Appeal in England though of course always such decisions are here treated with the greatest respect. It follows, therefore in my opinion that this Court had a perfect right to decide—as I consider it certainly did—in Singh $v$ . Murray that Dakin's case was wrongly decided.

In short I find myself—and I must confess with regret—precluded by the decision of this Court in Singh v. Murray from following the decision in Dakin's case. I therefore perforce concur with the results at which my brother Lockhart-Smith has arrived in his judgment.

Ţ.