Court dismisses breach claim where transfer failure due to third-party clerk refusal was unforeseeable and not defendant's fault.

[*108] 1973 May 31

(STAVRINAKIS, P. D. C.)

IN THE DISTRICT COURT OF NICOSIA

Savvas Christou,

Plaintiff,

and

Kyriakos G. Pilia,

Defendant.

(Action No. 2625/70).

Contract - Breach of contract - Impossibility of performance - Warranty for acts of third persons - Sale of land - Owner of certain shares agreeing to sell the whole to plaintiff and undertaking to transfer same in his name - Transfer not effected because D.L.O. clerk refused to accept power of attorney presented to him by the representative of an absent abroad co-owner - Defendant performed whatever he undertook to perform - Fact of refusal not a fact to be anticipated by the parties and not within the scope of the undertaking of the defendant - Who is not liable for breach - Contract Law Cap. 149 s. 56(2) and (3).

Pol. Petrides, for the Plaintiff.

M. Vasiliou, for the Defendant.

JUDGMENT

The following judgment was delivered by: -

STAVRINAKIS, P.D.C.: By this action the [*109] plaintiff .claimsdamages for breach of a written agreement dated 11th February, 1970, and judgment in his favour for the sum of £200 paid by the plaintiff to the defendant as a deposit for the sale of a piece of land. The facts are simple and mostly admitted.

The defendant agreed to sell to the plaintiff a piece of land at Kaimakli which did not belong absolutely to the defendant and this was to the knowledge of the plaintiff. After negotiations and after the defendant communicated with the other co-owners, it was agreed that the piece of land in question be sold to the plaintiff for the sum of £2800. The plaintiff, the defendant and an estate agent, P.W. 3, met at the house of the defendant on the 11th February, 1970, where the plaintiff drew a cheque to the order of the defendant for £200 as a deposit for the sale price. The estate agent prepared a receipt in which he included the main terms of the agreement and the defendant signed the said receipt which is before the Court as exhibit No. 1.

On the 16th February, 1970, the plaintiff together with the estate agent went to the District Lands Office where the defendant was already there with the other co-owners and the authorised agent of a co-owner residing in America. The clerk of the District Lands Office, to whom the declaration of sale was to be made, did not accept the power of attorney produced for the transfer of the share of the owner who was absent in America. The defendant then suggested to the plaintiff to accept the transfer of all the shares in the [*110] property with the exception of the share of the absent co-owner (share 1/9). The plaintiff said that he would have accepted the transfer of the shares of the present co-owners on condition that he was allowed to keep an amount equivalent to double the value of the share of the absent co-owner. The other co-owners did not accept the suggestion and the transfer of the property was not effected.

Some three months later, the plaintiff brought the present action. The defendant alleged that he never guaranteed the transfer of all the shares and further that the sum of £200 which he received was on account of his share and not on account of the whole sale price.

Having in mind the evidence as a whole, I find that the defendant was acting on behalf of the co-owners and of the authorised agent of the absent co-owner. I also find that he received the £200 not on account of his share but on behalf of all the co-owners. I further find that the plaintiff did not have any obligation to accept part transfer of the property and that he was entitled to treat the agreement as terminated.

The question, however, is whether the plaintiff is entitled to claim damages against the defendant for breach of contract. At first sight the defendant was not bound to perform the agreement on account of the unforeseen impediment which rendered the performance of the agreement, temporarily at least, impossible.

The legal aspect of the case is as follows according - to the provisions of section 56(2) (3) of the Contract Law, Cap. 149. [*111]

Section 56( 2): -

“A contract to do an act which after the contract is made becomes impossible, or, by reason of some event which the promisor could not prevent, un-lawful becomes void when the act becomes impossible or unlawful”.

Section 56(3):-

“Where one person has promised to do something which he knew or with reasonable diligence might have known and which the promisee did not know, to be impossible or unlawful, such promisor must make compensation to such promisee for any loss which such promisee sustains through the non-performance of the terms”.

Sub section 2 of section 56 is identical to section 56 of the Indian Contract Act. Pollock & Mulla say the following at p. 328 of the Indian Contract and Specific Relief Acts, 8th edition: -

“The second paragraph has the effect of turning limited exceptions into a general rule by the common law and a man who promises without qualification is bound by the terms of his promise, if he is bound at all. If the parties do not mean their agreement to be unconditional, it is for them to qualify it by such conditions as they think fit. But a condition need not always [*112] to be expressed in words; there are conditions which may he implied from the nature of the transaction; and in certain cases where an event making performance impossible is of such character that it cannot be supposed to have been in the contemplation of the contracting parties when the contract was made performance or further performance of the terms as the case may be is excused. On this principle, a promise is dischaged if without the promisor’s fault (1) performance is rendered impossible by law; (2) a specific subject matter assumed by the parties to exist or continue on existence is accidentally destroyed or fails to be produced or an event or state of things assumed as the foundation of the contract does not happen or fails to exist, although performance of the contract, according to its terms may be literally possible;

(3) the promise was to perform something in person and the promisor dies or is disabled by sickness or misadventure”.

The authors, commenting on the phrase ‘becomes impossible’, say; -

“More generally if a man choses to answer for the voluntary act of a third party and does not in terms limit his obligation to using his best endeavours, or the like, there is no reason in Law or Justice why he should not be held to warrant his ability to procure the act”. [*113]

Coming back to the facts of this case, in the light of the legal side, I cannot say that the defendant warranted, by signing exhibit No. 1, and by his prior to the agreement behaviour, the validity of the power of attorney which for some unknown reason, the clerk of the D.L.O. refused to accept The defendant executed whatever he undertook and assuming that his attitude amounted to a warranty about the transfer of the shares of all the co-owners, he did perform such an undertaking. All the co-owners, according to the evidence, as well as the authorized agent of the absent owner went to the D.L.O, ready and willing to transfer in the name of the plaintiff all their shares and they would have done so had it not been for the unforeseeable refusal of the clerk of the D.L.O. to accept the power of attorney presented to him. It cannot be said that the defendant or anyone of the contracting parties could have anticipated this impediment which was discovered at the last moment.

For all the above reasons, I find that the defendant is not in breach of the agreement. But even if I assume that he was in breach, the evidence regarding the compensation is flimsy and almost non-existent. The alleged breach was only 5 days after the agreement was made and there is no shred of evidence that the value of the property in question increased during this very short period of time. Also it had not been proved by the evidence adduced that the plaintiff bought the property in question at a price below its actual value. Therefore the plaintiff would only be entitled to nominal damages not exceeding £20. [*114]

In view of the above and also in view of the fact that the defendant never cashed the cheque of £200, the claim of the plaintiff is dismissed.

Regarding costs, I am of the opinion that there should be no order owing to the fact that the deal fell through due to no fault on the part of the plaintiff.

In the result the claim is dismissed and order is issued as per paragraph 1 of the counterclaim.

No order as to costs.

Claim dismissed. Order as per paragraph 1 of counterclaim.

No order as to costs.