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  • 1962-03-21
  • 1 GLR 190-194
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Contract?-Building contract?-Non-performance by contractor?-Quantum of damages?-Whether it includes loss of profits.


Under the terms of a building contract the defendant agreed to demolish the plaintiff?'s swish building and to construct another building on the same land. The contract was to be completed within eighteen months. On completion the plaintiffs were to grant to the defendant a sub-lease of the whole premises for a term of 60 years subject to their retaining four rooms in the new house in respect of which no payment was to be made. [p.191]The defendant demolished the swish building but did not fulfil the other terms of the agreement. The plaintiffs successfully sued him for damages for non-performance in the High Court and a referee was appointed to go into the question of damages and submit a report to the court.The question before the court was which of the quanta of damages recommended should be adopted. The report read:"I am asked to go into the question of the amount of money, if any, due and payable by the defendant to the plaintiffs, in full satisfaction of the plaintiffs' claim: I have interpreted these words as meaning that I must assess special damages only, which were direct result of the partial compliance and subsequent continuing breach of the contract.It would appear that it is a matter of legal interpretation and therefore within the court's jurisdiction, to decide whether damages are applicable relative to:(a) the mere expenses involved in the renting of accommodation up to the commencement of the action; or(b) compensation for the loss of the swish building, built in the early 1920's and rents therefrom for the continuation of its obviously limited life; or(c) compensation for the loss of rights and profits to be expected as a result of completion of the contract."


CONSIDERATION of referee's report on assessment of quantum of damages for non-performance of a building contract following interlocutory judgment entered for the plaintiffs by the High Court, Kumasi, on the 8th October, 1959.

In this case the plaintiff claimed from the defendant damages for non-performance of a contract in which the defendant undertook to demolish and rebuild premises situate at plot No. K.O. 101 at Kumasi. On completion of the contract within eighteen months, the plaintiffs were to grant to the defendant a sub-lease of the whole premises for a term of 60 years, subject to their retaining a number of rooms in the new house in respect of which no payment was to be made.

On the 8th October, 1959, this court entered interlocutory judgment in favour of the plaintiffs and the district valuer, in the person of Mr. J. E. Hall was appointed as referee to go into the question of quantum of [p.192] damages and to submit a report to the court. This report has been submitted. The question for me to determine is which of the quanta of damages recommended should properly be adopted.

Mr. Prempeh for the plaintiffs submitted that the referee's report as to special damages be adopted. He did not state which of the three assessments he sought to adopt. He, how- ever, asked for substantial general damages.

Mr. Davey, for the defendant stressed that the proper principle to follow in considering the quantum of damages is that enunciated in Hadley v. Baxendale.1 With that I entirely agree. He further submitted inter alia, that what the plaintiffs have lost is the use of the two living rooms and two stores.

[His lordship here read part of the referee's report as set out in the headnote and continued.]

It is not disputed that in furtherance of the building agreement the house in question was demolished, and never rebuilt again. It is obvious that any special damages must necessarily include compensation for the loss of the swish building and rents therefrom for its limited span of life. This the referee valued at G1,314.

The next point is whether the plaintiffs are entitled to compensation for the loss of rights and profits to be expected as a result of the completion of the contract. In my view I think they are entitled to such compensation, and I am fortified in this view by the authority of first, Victoria Laundry (Windsor) Ltd. v. Newman Industries Ltd., etc.2 where it was held that damages for loss of profit were recoverable if it was apparent to the defendants as reasonable persons that the delay in delivery was liable to lead to such loss by the plaintiffs, and it was not necessary for the defendants to be specifically informed of the particular purpose for which the boiler (in this case) was required; on the facts the defendants had means of knowledge that some loss was likely to result, and they were, therefore, liable to the plaintiffs.

The second authority is taken from Laws of England (3rd ed.) Halsbury, Vol. 3, pages 486 and 487, paras. 953 and 954, on measure of damages in respect of building contracts:

"953. The measure of damages for failure by the contractor to complete a building or engineering contract will include, first, the difference (if any) between the price of the work as agreed upon in the contract and the cost the employer is actually put to in its completion, and, secondly, any loss of rent of the building, or any loss of use of the building or in appropriate circumstances of business profit, which may accrue to the employer in consequence of any delay in obtaining the completed building or plant through the contractor's breach of contract. The right to recover the second item of damage is dependent on whether the use for which the building or works were intended was within the contemplation of the parties at the time when the contract was made. In certain cases, the measures of damages may be the loss of interest on the cost of the contract works, and of the land on which they are constructed. Damages for non-completion to time are recoverable in cases where the contract does not provide for liquidated damages for delay, or where liquidated damages are provided for, but the stipulation to that effect has ceased to be applicable.

954. Where the employer intends to use the building or works for some special purpose which is unknown to the contractor, the employer is entitled to recover as damages for the breach of contract the loss of use of the building or works for the purpose for which the contractor might have reasonably supposed it was to be used, if the employer has actually sustained damage to that extent. [p.193]

If, by reason of the construction not being such as was stipulated for in the contract, the work is not only useless to the employer, but actually causes damage to him, as by the breaking of a drain defectively constructed by the contractor, or by the bursting of an engine supplied by the contractor, a further element of damages may be introduced, namely, compensation for injury and damage occasioned by the accident."

Lastly, there is a Canadian case of persuasive authority, Canada Foundry Co. Ltd. v. Edmonton Portland Cement Co.3 noted in the English and Empire Digest, Vol. VII, page 405, which reads:

"Loss of profits may be claimed upon breach of a building contract through failure to complete, on the ground that they may fairly be considered as arising naturally, that is, according to the ordinary course of things, from such breach, and if they are also such a loss as may reasonably be supposed to have been in the contemplation of the parties at the time they made the contract as the probable result of the breach of it. Deprivation of the use of the building may also be compensated for quite aside from the question of profits."

And also noted on the same page, is the case of Smith v. Tennant4 which reads as follows:

"Defendant agreed with plaintiff to exchange five houses, then in the course of erection, for certain lands of plaintiff, the houses to be completed by a certain date:

Held: The loss of rents which might have been obtained for the houses if completed at the proper time was a proper measure of damages, the contracting parties having known that the houses were intended to be rented."

According to the agreement, which by consent of counsel was handed to me to use as evidence, the defendants were to demolish the plaintiffs' building and construct another building on the same land. The plaintiffs were then to grant a sub-lease to the defendant of the whole building less four rooms, for 60 years. After 60 years the building will naturally revert to the plaintiffs for the remainder of the term of the head lease. In my opinion by the breach of the agreement at the time when it occurred the plaintiffs lost their swish house, then the use of the four rooms rent-free for the term of the main lease, i.e. after the completion of the building, and then also they lost the rents and profits that would have come to them after the expiry of the 60 years. I think that it was obvious to both the plaintiffs and the defendant during the transaction that the plaintiffs were postponing the enjoyment of the rents and profits of the building (when they would get more) until after 60 years.

Upon the facts and authorities I will adopt the alternative assessment (c) of the referee's report and award special damages of G1,416 to the plaintiffs.

As to general damages I regret that I have very few facts to go by and confess myself in considerable difficulty. But this is no ground for not awarding damages. It is obvious that with the old house demolished and nothing built to replace it, the plaintiffs and their family would suffer inconvenience. But as counsel for the defendant has rightly pointed out the plaintiffs should have taken steps to mitigate the damages. In all the circumstances I think that I will not award any substantial damages. I think G400 will be adequate general damages and I will award that amount.

There will be judgment for the plaintiffs for G1,416 special and G400 general damages. Costs to the plaintiffs assessed at 75 guineas inclusive. [p.194]

Counsel for the defendant wished to know if I dealt with his contention that plaintiffs should have taken steps to mitigate both the special damages as well as the general damages. I have already considered the point and have come to the conclusion that special damages if proved cannot be affected by mitigating circumstances but general damages could.


Judgment for the plaintiffs for special and general damages.

Plaintiff / Appellant

J. K. Prempeh

Defendant / Respondent

G. Davey


(1) Hadley v. Baxendale (1854) 9 Exch. 341; 156 E.R. 145

(2) Victoria Laundry (Windsor), Ltd. v. Newman Industries, Ltd. etc. 9 [1949] 2 K.B. 528; [1949] 1 All E.R. 997

(3) Canada Foundry Co. Ltd. v. Edmonton Portland Cement Co. [1918] 3 W.W.R. 866; 43 D.L. R. 583

(4) Smith v. Tennant (1890) 20 O.R. 180

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