PELE AND ANOTHER vs. INTERNATIONAL COMMERCIAL BANK [2001-2002] 1 GLR 53

CASES REFERRED TO:

(1) Smith v Hughes [1861-73] All ER Rep 632.

(2) Brogden v Metropolitan Railway Co (1877) 2 App Cas 666, HL.

(3) Boye v Achimota Brewery Co Ltd [1982-83] GLR 955.

(4) Praah v Anane [1964] GLR 458, SC.

(5) Ghana Ports and Harbours Authority v Issoufou [1993-94] 1 GLR 24, SC.

(6) Robinson v Harman (1848) 1 Ex 850.

ACTION by the plaintiffs against the defendant-bank for damages for breach of a tenancy agreement entered into between them and the defendants. The facts are sufficiently set out in the judgment. Tanko Amadu for the plaintiffs.

Florence Hagan for the defendants.

Gyamera-Tawiah J. On 16 July 2001, I entered judgment in [p.56] of [2001-2002] 1 GLR 53 favour of the plaintiffs against the defendants in this suit as follows:

(1) There exists a binding contract between the plaintiffs and the defendants by which contract the defendants were to take a lease of the plaintiffs’ premises house No 67, Kotobabi Road, Kotobabi, Accra for a period of five years with effect from 1 November 1999.

(2) The amount of ¢141,682,000 paid by the defendants to the plaintiffs represented twenty-five per cent of the first year’s rent in respect of the lease agreement.

(3) The defendants are to pay the plaintiffs the seventy-five per cent balance of the first year’s rent representing an amount of ¢425,046,000 together with seven and a half per cent interest with effect from 1 November 1999 till date of final payment.

(4) The defendants are to pay rents from 1 January 2000 to today, ie 16 July 2001. (5) The defendants are to pay rents from 16 July 2001 to the date of expiry of the five-year term, ie 31 October 2004.

I awarded the plaintiffs costs of ¢30 million. But I adjourned the suit to 31 July 2001 to give full reasons for the said judgment. Unfortunately due to ill health and pressure of work, I could not give the reason on the said date which incidentally happened to be the last day of the term. Now that a new legal year has commenced, I proceed to give the reasons.

By their amended writ of summons the plaintiffs claim against the defendants:

“(1) A declaration that the defendants have breached the tenancy agreement between the plaintiffs and the defendants to commence on 1 November 1999 in respect of the plaintiffs’ five-storey building situate at No 67 Kotobabi Road, Kotobabi, Accra.

(2) An order of specific performance in respect of the defendants’ obligations under the tenancy agreement between the plaintiffs and the defendants in respect of the plaintiffs’ five-storey building situate at No 67 Kotobabi Road, Kotobabi, Accra.

(3) General damages for breach of contract.”

[p.57] of [2001-2002] 1 GLR 53

The defendants in turn counterclaimed against the plaintiffs as follows: (1) the defendants counterclaim for the refund of all payments made on account; and (2) interest on the said sum at the current bank rate from 25 September till date of final payment.

At the close of pleadings, the following issues filed by the plaintiffs were set down for trial:

“(a) Whether or not there is a tenancy agreement between the plaintiffs and the defendants to commence on 1 November 1999.

(b) Whether or not the defendants are in breach of the said tenancy agreement to commence on 1 November 1999.

(c) Whether or not the plaintiffs are entitled to the reliefs endorsed on the writ of summons.

(d) Whether or not the defendants are entitled to their counterclaim.

(e) Any other issues arising from the pleadings.”

The undermentioned issues were filed by the defendants and were also set down for trial:

“(a) Whether or not the tenancy agreement between the plaintiffs and the defendants was executed by both parties.

(b) Whether or not the rent payable under the tenancy agreement sent under cover of a letter dated 24 March 1999 was due.

(c) Whether or not the tenancy agreement sent under cover of the letter dated 24 March 1999 commenced on 1 November 1999 or 1 May 1999 which was altered by the plaintiffs to read 1 June 1999.

(d) Whether or not the tenancy agreement sent under cover of the letter dated 24 March 1999 was effective.

(e) Whether or not the time for terminating the agreement sent under cover of the letter dated 24 March 1999 was three months’ notice or twelve months’ notice after five years.

(f) Whether or not the plaintiffs had acknowledged the determination of the tenancy agreement by the defend-

[p.58] of [2001-2002] 1 GLR 53 ants.”

The first plaintiff is Abedi Ayew Pele, a renowned Ghanaian footballer. His wife, Mrs Maha Ayew Pele, is the second plaintiff. The defendants are an international bank trading under the name of International Commercial Bank, Accra. The case of the plaintiffs was presented through their lawful attorney, Tanko Amadu, a legal practitioner. The case of the defendants was mainly presented through Miss Florence Hagan, their legal officer. Two other witnesses—Gerald Annang Forson, a professional photographer and Hoffman Edmund Lartey an architect—also testified on behalf of the defendants.

On 16 September 1998 the chief executive officer of the defendant-bank, Mr Lim Say Hoe, wrote a letter on behalf of the defendant-bank to the plaintiffs. A portion of the letter tendered in evidence as exhibit B by the plaintiffs’ attorney reads:

“PROPOSED TENANCY OF 5-STOREY BUILDING AT KOTOBABI, ACCRA We write to confirm our Bank’s interest and intention to lease your 5-storey building at Kotobabi on the terms discussed with yourself and your representatives subject to the final agreement by our Bank’s board of directors.

As indicated to you at our meeting of 15 December 1998 at the bank, we shall revert to you immediately with a draft tenancy agreement when our Board of Directors have accepted all the terms relating to the lease of this building.”

On 24 March 1999 Mr Lim Say Hoe aforesaid wrote to the plaintiffs a second letter. This letter was tendered in evidence by the plaintiffs’ attorney as exhibit C; it partly reads:

“DRAFT TENANCY AGREEMENT FOR 5-STOREY BUILDING AT KOTOBABI, ACCRA With reference to the lease of the above premises by the bank and to the numerous negotiations we had, we enclose herewith a draft tenancy agreement for your consideration and acceptance.

[p.59] of [2001-2002] 1 GLR 53 Please also confirm to us your acceptance of the tenancy terms which are given below by signing and returning to us the duplicate of this letter.”

The draft tenancy agreement which was attached to exhibit C was also tendered in evidence as exhibit D. The plaintiffs duly signed the duplicate of the letter exhibit C and returned same to the defendant-bank. The draft date of 1 May 1999 as the tentative date of commencement of the tenancy agreement was altered by the plaintiffs to read 1 June 1999. The plaintiffs’ attorney was cross-examined on the alteration of the commencement date as follows:

“Q Look at exhibit C, that letter did not come with pen cancellation. Did it come to you with cancellations?

A No.

Q So who cancelled the month May to June?

A The plaintiffs cancelled it on the defendants’ instructions because by June the defendants had entered into an agreement for demolitions and alterations by the plaintiffs’ contractor. That caused the extension from May to June.

Q Who is the author of the cancellation on exhibit D?

A It was cancelled by the plaintiffs on the defendants’ request.

Q The commencement date on that agreement (exhibit D) was 1 May 1999 when it was sent to you?

A Yes.

Q The alterations made on exhibits C and D were made by yourselves and not on the instructions of the defendants?

A That is not correct; it was made at the defendants’ request.

Q Were you the one the defendants spoke to regarding that request?

A No, but during our meeting on 5 August 1999 the issue of further request for commencement was raised. I was present at that meeting when officers of the defendants assured us that it would be their last request; hence the commencement date of 1 November 1999 was then accepted by us.”

[p.60] of [2001-2002] 1 GLR 53

It has been contended by the principal witness for the defendants and also by the learned counsel for the defendants in his address that the plaintiffs unilaterally altered the commencement date from 1 May 1999 to 1 June 1999. The above cross-examination of the plaintiffs’ attorney by learned counsel appears to suggest otherwise. Whatever it may appear to be, another letter written by the same Lim Say Hoe to the plaintiffs would appear to erase any doubt about the said alteration. The said letter tendered in evidence by the plaintiffs’ attorney as exhibit E reads in part:

“LEASE OF BUILDING AT NO 67 KOTOBABI ROAD, ACCRA We refer to the lease of the above premises by the bank and to the tenancy agreement which was st accepted/signed by you and faxed to us on 1 May 1999. Arising from the bank’s board of directors’ meeting in Malaysia in early June 1999, the board has now redecided that the bank will only be prepared to rent the ground and first floors of the 5 storey building.

We regret for the inconvenience caused and would appreciate your response to the matter.”

This clearly shows that the defendants accepted the mode of acceptance which the plaintiffs made to their offer to lease the plaintiffs’ premises. By the words of exhibits B, C and D, clearly, the defendants made an offer to the plaintiffs, and no other inference could have been drawn from the three documents.

Lord Blackburn in Smith v Hughes [1861-73] All ER Rep 632 at 637 stated:

“If, whatever a man’s real intention may be, he so conducts himself that a reasonable man would believe that he was assenting to the terms proposed by the other party, and that other party upon that belief enters into the contract with him, the man thus conducting himself would be equally bound as if he had intended to agree to that party’s terms.”

Since exhibit D required the plaintiffs to indicate their acceptance in a particular manner which the plaintiffs obliged, the offer made by the defendants was duly accepted by the plaintiffs. Learned

[p.61] of [2001-2002] 1 GLR 53 counsel for the defendants asked the plaintiffs’ attorney: Was there any acceptance letter from plaintiffs? The answer given was:

“Exhibit B was followed by exhibit C accompanied by exhibit D and the plaintiffs were expected to indicate their acceptance by executing exhibit D and dispatching same to the defendants, which exercise the plaintiffs complied with.”

In Brogden v Metropolitan Railway Co (1877) 2 App Cas 666 at 691, HL, Lord Blackburn had this to say:

“. . . I have always believed the law to be this, that when an offer is made to another party, and in that offer there is a request express or implied that he must signify his acceptance by doing some particular thing, then as soon as he does that thing, he is bound. If a man sent an offer abroad saying: I wish to know whether you will supply me with goods at such and such a price, and, if you agree to that, you must ship the first cargo as soon as you get this letter, there can be no doubt that as soon as the cargo was shipped the contract would be complete, and if the cargo went to the bottom of the sea, it would go to the bottom of the sea at the risk of the orderer.”

The first defendant witness under cross-examination corroborated the evidence of the plaintiffs on the mode of acceptance of the offer by the defendants:

“Q In exhibit E it is acknowledged that it was the plaintiffs who signed the tenancy agreement that was faxed on 1 May 1999?

A It indicates that; it says that ‘accepted and signed by you’, and since it was addressed to the plaintiffs I can say that we accepted it as such.”

I am therefore convinced from the evidence on the record that:

(a) The defendants made an intention to offer to let the plaintiffs’ five-storey building (exhibit B). (b) The defendants followed exhibit B with exhibits C and D. Exhibit C required the plaintiffs to signify their acceptance of the defendants’ offer and the terms contained in

[p.62] of [2001-2002] 1 GLR 53 exhibit D and returning same to the defendants. The signing and returning of exhibit D was the mode of acceptance indicated by the defendants.

(c) The plaintiffs signified their acceptance to the defendants’ offer by signing exhibit D and returning same to the defendants.

On the commencement date, there is sufficient evidence that both parties agreed and settled on 1 November 1999. In exhibit H, a letter written by the solicitors for the plaintiffs to the chief executive officer of defendant-bank stated, inter alia:

“RE: HANDING OVER OF PROPERTY AT NO. 67 KOTOBABI ROAD, ACCRA You would recall that at the last meeting jointly held between your goodselves and our clients on or about 5th day of August 1999 you requested that the handing over of the property described above be fixed for 1st September 1999 while the commencement date of the tenancy agreement is fixed for 1st November 1999 to enable your bank have adequate time to move in and make the necessary installations required for the performance of your business as bankers.”

The cross-examination below of the first defendant witness by counsel for the plaintiffs also testified to the actually agreed date of commencement, ie 1 November 1999:

“Q The amendment you claim in exhibit D is to the date of commencement?

A Yes.

Q And that was changed from June to 1 November by mutual consent, not so?

A It was changed from May to November by mutual consent.”

I understand “by mutual consent” to mean “by agreed consent of both the plaintiffs and the defendants.” The change of the commencement date will not affect the [sic] Co Ltd [p.63] of [2001-2002] 1 GLR 53

[1982-83] GLR 955 held at 960 that parties to a contract are at liberty to effect a variation of their contract by modifying or altering its terms by mutual agreement and that:

“When this happens the contract arrived at is the original contract with the variation or modification written in place of the term that is varied or modified. There is no new contract but the original one.”

It is in respect of this that I find exhibit 2 to be of no great legal consequence. Exhibits 2 and C are essentially the same. The only difference is that whereas in exhibit 2 the commencement date was tentatively fixed at 1 May 1999, exhibit C amended this to read 1 June 1999. Why I say exhibit 2 is not of much legal significance is that according to the first defendant witness, Ms Florence Hagan, by mutual consent the said date, 1 May 1999, was changed to 1 November 1999. Therefore whether the date was 1 May 1999 or 1 June 1999, both parties had mutually changed it to 1 November 1999, and accordingly any issue as to whether or not the commencement date tentatively fixed at 1 May 1999 was unilaterally changed to 1 June 1999 by the plaintiffs would not be of any significance.

It has also been contended by learned senior counsel for the defendants that by the combined effect of exhibits 2 and 3, there was never any executed agreement between the plaintiffs and the defendants to constitute a binding contract. I have already commented on exhibit 2. I shall proceed to deal with exhibit 3 which is a letter addressed to the plaintiffs’ solicitors by Mr Lin Say Hoe. It is dated 28 April 1999 and I need to quote the entire contents:

“TENANCY AGREEMENT FOR NO 67 KOTOBABI ROAD KOTOBABI, ACCRA We refer to your letter of 24 March 1999 and we acknowledge receipt of your confirmation to the tenancy terms highlighted in our letter. However to date we have not received any indication of your acceptance to the draft tenancy agreement forwarded to you. We appreciate any early response to enable us to proceed with the final copy. Also please inform

[p.64] of [2001-2002] 1 GLR 53 us of the date the building can be handed over to our bank.

We will pay you the 25 per cent of the first year rental when both parties sign the tenancy agreement, and the remaining balance will be paid to you when we take possession of the building. As discussed, we will credit your account with the rental and kindly open your account with our bank as soon as possible.

Thank you and with kind regards.”

In fact one Mr Khaldi replied to exhibit 3 that the plaintiffs (ie Mr & Mrs Abedi Pele) were out of their station and would be back by 1 May 1999. Mr Khaldi’s reply to exhibit 3 was tendered in evidence as exhibit 4. The latter part of exhibit 4 reads: “Immediately they arrive, everything will be signed and mailed to me by DHL and you will receive these documents as soon as possible.”As events later showed the plaintiffs duly complied with exhibit 3 and forwarded exhibits C and D to the defendants duly signed. This is confirmed by the defendants’ letter to the plaintiffs dated 23 June 1999 on the same subject matter. That letter was tendered in evidence by the plaintiffs as exhibit E. It states:

“We refer to the lease of the above premises by the bank and to the tenancy agreement which was accepted/signed by you and faxed to us on 1 May 1999. Arising from the bank’s board of directors’ meeting in Malaysia in early June 1999, the board has now redecided that the bank will only be prepared to rent the ground and first floors of the 5 storey building.

We regret for the inconvenience caused and would appreciate your response to this matter.”

(The emphasis is mine.) The plaintiffs’ solicitors did not take kindly to exhibit E and wrote exhibit F to the defendants dated 30 June 1999 in which it was stated, inter alia:

“My instructions are that at your request and to meet your peculiar need (use) of the said five (5) storey building at Kotobabi, as tenant, my clients substantially altered the construction of the said building to meet your demand and specifications.”

[p.65] of [2001-2002] 1 GLR 53

From the records, the parties met on 5 August 1999 where some agreements were arrived at. Exhibit H (a letter written by the plaintiffs’ solicitors to the defendants) is of much significance here. Portions of exhibit H, dated 1 September1999 read:

“RE: HANDING OVER OF PROPERTY AT NO 67 KOTOBABI ROAD, ACCRA You would recall that at the last meeting jointly held between your goodselves and our clients on or th about 5 day of August, 1999 you requested that the handing over of the property described above be st st fixed for 1 September 1999 while the commencement date of the tenancy agreement is fixed for 1 November 1999 to enable your bank have adequate time to move in and make the necessary installations required for the performance of your business as bankers.

In pursuance of the mutual agreement at the said meeting your company secretary made available 3 (three) final copies of agreements containing the same terms of the agreement earlier signed by our clients and despatched to you by fax but which only incorporated the dates agreed upon at the meeting under reference. (The said agreements have since been signed by our clients and are enclosed herewith for your execution.) st Regrettably, when on the 31 day of August 1999 Mr Tanko Amadu our clients’ Accra based solicitor visited your office to find out the exact time for the handing over fixed for today and whether it would require an elaborate ceremony he was informed by one of your managers that due to some internal problems your bank is facing you have decided to have the handing over deferred indefinitely.”

A photocopy of the tenancy agreement duly executed by the plaintiffs was tendered in evidence by the plaintiffs as exhibit G. The defendants tendered the original in evidence as exhibit 6. Both documents have 1 November 1999 as the commencement date.

However, on the same day, ie 1 September 1999, the defendants also wrote to the plaintiffs as contained in exhibit J:

“We write to inform you that we are unable to proceed with the prearranged handing over of the building scheduled for 31

[p.66] of [2001-2002] 1 GLR 53

August 1999 as we are still awaiting clarification and directions from Malaysia. This has necessarily caused a delay in the proceedings.

We therefore apologise for any inconvenience this might cause and we shall endeavour to revert to you as soon as possible.”

On 7 September 1999 the defendants wrote to the plaintiffs’ solicitors inviting them to a meeting to discuss or reconsider certain matters pertaining to the tenancy agreement—specifically, a downward review of the rent payable thereunder. The latter further re- quested a “short delay” until the defendants’ board of directors had met. It also regretted the delay and stated: “Our inability to proceed was due to circumstances beyond our control.” Then came the bombshell on 24 September 1999—exhibit K, from the defendants to the plaintiffs’ solicitors:

“Dear Sir, TENANCY OF NO 67 KOTOBABI ROAD, KOTOBABI, ACCRA I am instructed by the board of directors of International Commercial Bank Ltd that we are not able to take up the tenancy of a 5 storey property situated at No 67 Kotobabi Road which was due to commence on 1st November 1999.

We therefore by this letter inform you of our withdrawal from this transaction.

As a 25 per cent payment was made in anticipation of this arrangement we respectfully request that this payment be refunded to us as soon as possible.

We apologise for any inconvenience that this withdrawal might cause.

Thank you.”

Exhibit K was signed by the first defendant witness.

Naturally the plaintiffs’ solicitors wrote exhibit L in response to exhibit K. Part of it is quoted hereunder: “Your letter dated 24 September 1999 under reference ther

[p.67] of [2001-2002] 1 GLR 53 fore comes as a surprise and is in clear breach of the agreement arrangements and understanding reached between us on our clients’ property at No 67, Kotobabi Road, Accra.

Your request therefore for a refund of the 25 per cent advance payment made in partial satisfaction of your financial obligations under the tenancy agreement is premature by reason, inter alia, of the substantial alterations effected by our clients to the property at your request, the financial resources committed by our clients to give effect to your said peculiar needs, the cost of reverting to the original plan are all material and outstanding.

You are no doubt aware that any withdrawal at this stage must be subject to costs, losses and damages suffered by our clients as a result of your purported withdrawal.

Without prejudice to any claim for breach of contract a detailed assessment of such losses and/or damages would be made available to you in due course should you insist on your purported withdrawal.”

Exhibit L is dated 1 October 1999.

It has been strongly contended that there is no written or executed agreement between the parties to constitute a binding contract, ie that no lease agreement had been executed by the parties. From the evidence of the plaintiffs’ attorney and first defendant witness, as well as the exhibits tendered (especially exhibits F, H, L, K, M, P, Q & R), there were sufficient acts of part performance on the part of the plaintiffs to entitle them to succeed on their claim. Several structural alterations were made by the plaintiffs, at the request of the defendants, on the premises to meet the defendants’ specifications in the performance of their business as bankers. Surely all these acts were done after the plaintiffs had signed exhibits C & D, and in my opinion could not have been referable to any other agreement. What was the provision of a vault for? In fact the first defendant witness, the defendants’ legal officer and principal witness, admitted that it was the defendants who requested the plaintiffs to provide a vault to meet their banking business requirements or needs. I am therefore quite convinced that the acts of part performance executed by the plaintiffs were in respect of and referable only

[p.68] of [2001-2002] 1 GLR 53 to the tenancy agreement which was to come into effect on 1 November 1999. And I venture to say that from both the documentary and oral evidence available to this court, it would be highly fraudulent to permit the defendants to avoid the tenancy agreement (exhibit 6) which they failed or refused to execute, since the defendants had clearly expressed interest in the property and the plaintiffs heavily relied on the defendants’ representations to effect alterations to the property to make it suitable for the defendants’ occupation and business. The defendants would be estopped from reneging on their own promise to take the tenancy. Section 26 of the Evidence Decree, 1975 (NRCD 323) has this to say on estoppel:

“26. Except as otherwise provided by law, including a rule of equity, when a party has, by his own statement, act or omission, intentionally and deliberately caused or permitted another person to believe a thing to be true and to act upon such belief, the truth of that thing shall be conclusively presumed against that party or his successors in interest in any proceedings between that party or his successors in interest and such relying person or his successors in interest.”

The next issue to consider is whether the defendants were justified in withdrawing from the tenancy agreement. The first defendant witness tried to make the court to believe that the premises was not ready for occupation even long after 1 November 1999, ie the commencement date. Under cross-examination, the first defendant witness said:

“The last time I visited the building was on 9 June 2000 and I found the structure to be as described in the sketch plan for No 10 Towers. Also certain works had not been completed, for example electrical wiring, no stand-by generator and there was no demarcation for twelve cars.”

The defendants tendered exhibit 7, photographs of the building taken in 2001, ie this year, to buttress their case that wiring had not been completed.

I find the contention of the defendants that they could not take the property because the building was not ready for occupation as

[p.69] of [2001-2002] 1 GLR 53 an afterthought, with much deference to the first defendant witness and learned counsel for the defendants. Nowhere in their correspondence did the defendants state, directly or by implication, that their inability to take over the premises was due to the plaintiffs’ inability to make the premises ready for occupation. In exhibit J the defendants attributed their inability to take over the premises on 31 August 1999 thus: “We are still awaiting clarification and directives from Malaysia.” In exhibit 5, the defendants explained their inability thus: “Our inability to proceed was due to circumstances beyond our control and for which we apologised for any inconvenience caused.” I, therefore, find that but for this “internal problem” facing the defendants, they were ready to take over the property as scheduled. The plaintiffs also tendered exhibit 5 to debunk the defendants’ contention that they had not obtained the approval from the Bank of Ghana to open another branch in Accra. Exhibit S is the 1998 Annual Report of the defendant-bank.

The claim of the plaintiffs for specific performance cannot be granted. The first defendant witness informed the court that the defendant-bank had acquired another office at Kasoa for their business and can therefore not take the lease of the plaintiffs’ property. I shall therefore consider their alternative relief of damages.

I have already decreed that the defendants are in breach of the tenancy agreement which was due to commence on 1 November 1999 in respect of the plaintiffs’ five-storey building situate at No 67 Kotobabi Road, Kotobabi, Accra. It was held in Praah v Anane [1964] GLR 458 at 466, SC that: “The breach of a contract normally gives the innocent party a right to damages at common law.” In the often-cited case of Ghana Ports and Harbours Authority v Issoufou [1993-94] 1 GLR 24 at 40, SC Aikins JSC had this to say:

“While admitting that a breach of contract, whatever form it takes, entitles the innocent party to maintain an action for damages, it is my view that the law, as buttressed by a long line of authorities, is that the right of a party to treat a contract as discharged emanates from two types of cases. First, where the contract has been repudiated by the party in default before performance is due or before it has been fully performed.

[p.70] of [2001-2002] 1 GLR 53

Secondly, where the party in default has committed a fundamental breach, ie the promise that has been violated is of a major as distinct from a minor importance . . . Repudiation in this sense may be explicit or implicit.

It must be pointed out that, even if all further liability has been wrongfully repudiated by one of the parties, or one of them has been guilty of a fundamental breach, the contract will not be considered as having automatically come to an end. This is so because the familiar test of offer and acceptance serves to determine the common intention of the parties. Where, for example, A and B are parties to an executory contract, and A indicates his inability, or expresses his unwillingness to perform his outstanding obligations, he is in effect making an offer to B that the contract shall be discharged. Therefore B is presented with an option to either refuse or accept the offer . . . To be precise, B may either affirm the contract by treating it as still subsisting, or he may treat it as finally and conclusively discharged, and the consequences vary according to the choice that he prefers.

If the innocent party takes the first option, and fully aware of the facts, makes it clear by words or acts, or even by silence, that he refuses to accept the breach as a discharge of the contract, the status quo ante is effectively preserved, ie the contract remains in being for the future on both sides, and each party has a right to sue for damages for past or future breaches.”

In this suit it is clear that the plaintiffs have refused to accept the defendants’ breach and they treat the contract (ie the tenancy agreement) as still subsisting. The plaintiffs are therefore entitled to general damages for breach of contract.

Parke B held in Robinson v Harman (1848) 1 Ex 850 that:

“The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.”

By the terms agreed upon by both parties, a party could terminate [p.71] of [2001-2002] 1 GLR 53 the agreement only after the first five years. The plaintiffs are therefore entitled to rent for the first five years commencing from 1 November 1999. As at the commencement of this suit, the defendants had even partly performed part of their contractual obligations by making twenty-five percent advance of the first year’s rent to the plaintiffs. The defendants are therefore to pay the seventy-five percent balance of the first year’s rent with seven and a half percent interest with effect from 1 November 1999 till date of final payment. The defendants are also to pay rent from 1 November 2000 to 16 July 2001, ie the date of this judgment; they are also to pay rents to the plaintiffs from 16 July 2001 to the date of expiry of the first five years of the tenancy agreement, ie 31 October 2004.

I believe the reasons adduced for the judgment have taken care of all the issues raised by both the plaintiffs and the defendants. There was therefore no need to tackle them seriatim.

Judgment for the plaintiffs.

IS