Castrol Limited v John Michael Motors Limited (SC CIV APP 1 of 1998) [2005] SLSC 3 (5 July 2005)

Fe - S.C. CIV. APP NOL 98 ’ IN THE SUPREME COURT OF SIERRA LEONE + BETWEEN CASTROL LIMITED “APPELLANT AND JOHN MICHAEL MOTORS LIMITED -RESPONDENT

Coram

HON. MR. JUSTICE A.R.D. RENNER-THOMAS -CHIEF JUSTICE HON. MR. JUSTICE $.C.E. WARNE “SC. HON. MR. JUSTICE E.C.THOMPSON-DAVIS JSC. HON MR.JUSTICE ME.TOLLA THOMPSON “SC. HON.JUSTICE SIR JOHN MURIA “LA Berthan Macaulay (Jnr) Esq, forthe Appellant Abdul Tejan-Cole Esq. and Martin Michael Esq. for the Respondent

JUDGMENT DeLivereD THE S* pay ote 2005 Renner-Thomas, C.J. The Appellant in this Appeal, Castrol Limited (hereinafter referred to as “Castrol”) is an English Company and was at all ‘material times wholesalers of various lubricants and other allied products (hereinafter referred to as “Castrol products”) in respect of which they had appointed the Respondent John Michael Motors Limited, the Respondent herein, (hereinafter referred to as “John Michael Motors”) as sole distributor in Sierra Leone sometime in 1971. John Michael Motors was at all material times a local Company engaged in the business of importing, marketing and-distributing the said Castrol products as well as in the sale and servicing of motor vehicles, motor cycles and other allied products. The terms and conditions of the agreement under which John Michael Motors was appointed sole distributor of Castrol products were not pleaded nor was evidence led on the same. Until September 1987 John Michael Motors continued to act as sole distributor of Castrol products in Sierra e Leone. Thereafter, it was agreed between the parties that the Second aan i

~; Defendant in the High Court, Datsun Motors Limited, (hereinafter referred 7 to as “Datsun Motors”) would also be allowed to import and distribute q Castrol products in Sierra Leone. It was further agreed that for each consignment of Castrol products Datsun Motors imported into Sierra * Leone Castrol would pay John Michael Motors a commission of 5 per cent of the C.LF. value of the consignment. a On the 5 day of November 1987 Castrol addressed the following communication to John Michael Motors:- “ WE HEREBY GIVE YOU NOTICE terminating the Distribuion Agreement or arrangements between Castrol Limited and John Michael Motors Limited on 7" February 1988, From such date you must not hold Yourself out as being authorised to distribute Castrol Limited lubricants and allied products in the Territory of Sierra Leone and you must remove Jrom all stationery and other literature any reference to your company being a distributor of Castrol Lubricants and Allied Products. Castrol Limited reserves its rights against John Michael Motors Limited in respect of the outstanding sterling account of £16,238.42 payment of which we understand Mr. John Michael of 9 Cherrington Close, Shankhill Co. Dublin, Republic of Ireland has accepted primary responsibility. We put you on Notice that we reserve rights against you in the event that Mr.John Michael does not settle these outstanding améurts'xi¥ijie.the next 30 days”. ‘The document was admitted in evidence during the trial and marked as Exhibit “D”. Quite understandably, the management of John Michael Motors was quite displeased at this development. In a letter addressed to Castrol, the General Manager of John Michael Motors stated that management was completely surprised to have received such a letter without any previous comment on the subject; He continued as follows:- “We have been selling and distributing your products since the early 1972 even at the time when companies like Shell, BP, Mobil,Texaco were not to be competed with. We have done a lot to push your products in this part of the world = and if there is success today, it is because of our past effort. We have

been advertising, printing signs and made adverts on Television and Radio at our own expense. Whai Castrol has provided in terms of adverts is not even 20% what we have spent locally.” * The letter was admitted evidence as Exhibit “E”. ; This was followed by another more detailed letter dated 26" November 7 1987 from Mr. John Michael to Mr Scott of Castrol. For the first time, the issue of the inadequacy of the notice to terminate the distribution agreement was raised. The reply from Castrol was contained in a letter dated 22™ January 1988 signed by Mr. Scott, as Solicitor and Assistant Legal Adviser, addressed to Mr. John Michael. First, Mr. Scott gave as reason for terminating the agreement the poor sales performance “during the last few years compared with (Castrol’s] assessment of the real market potential in Sierra Leone for Castrol lubricants, if marketed aggressively”. Secondly, he said Castrol’s decision to terminate the agency agreement was irrevocable. Thirdly, and most importantly for this matter, Castrol refused to extend the period of notice. Consequently, John Michael Motors instituted an action in the High Court in which Castrol was First Defendant and Datsun Motors was Second Defendant. In their amended Statement of claim John Michael Motors contended, inter alia, that in the absence of any agreed period for the termination of the distributorship agreement reasonable notice should have been twelve months rather than the three months given by Castrol. It claimed, inter alia, damages for breach of contract and £240,000/00 apparently as special damages. At the trial the General Manager of John Michael Motors gave uncontroverted evidence of their contention that the Plaintiff Company had spent a lot of time and money in promoting Castrol products in Sierra Leone and that it stood to lose a considerable amount of profit on lost sales | of Castrol products and on collateral business because of the alleged | unlawful termination of the agreement. The trial Judge agreed with the contention of John Michael Motors that three months notice was unreasonable in the circumstances to terminate the agreement. He held that twelve months notice was reasonable in the circumstances of this case. However, the trial judge rejected the claim for £240,000/00 which he dealt ~ with as special damages but went on to award the John Michael Motors

wt general damages of £200,000.00. Perhaps, I should mention for 7 completeness that the trial judge allowed the claim of John Michael Motors ~ against Datsun Motors. id Being dissatisfied with the decision of the trial judge as far as it affected 7 them Castrol appealed to the Court of Appeal on several grounds. The 7 Court of Appeal rejected the appeal and agreed with the trial judge that twelve months notice should have been given for the termination of the distributorship agreement instead of three months. The Court of Appeal also upheld the award of the sum of £200,000/00 as general damages. It is against this Judgment of the Court of Appeal that Castrol hes appealed to this Court on the following grounds: “@M The Court: ‘of Appeal ‘having failed to draw the Proper and or correct inferences from the facts established at the trial wrongly affirmed the decision of the Learned Trial Judge that reasonable notice in the instant case was twelve ‘months and that the Appellant wee in breach Of their agreement with the Respondents by not giving them twelve ‘months notice to determine the said Agreement.

(2) The Court of Appeal in upholding the decision of the Learned Trial Judge that twelve months notice was reasonable in the instant case misdirected itself in holding that the case of DECRO-WALL INTERNATIONAL S. A. VSPRACTITIONERS. IN MARKETING LIMITED (1971) 2 ALL.E. R. 216 “played a pivotal role” in that the said case was clearly distinguishable. 2 from the case before the Court and that the award of twelve months notice in that case ought not to have been replicated. by the Learned Trial Judge nor confirmed by the Court of appeal in the instant case.

(3) The Court of Appeal failed to consider or adequately consider the Appellant's case on the question of reasonable notice in the circumstances of the particular case that was before the Court. | NS = sel The Court of Appeal in dismissing ground two (2) of the Appellant's grounds of appeal, which was sé couched in the following terms:-

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