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(1982)1982 April 12 [SAVVIDES, J.] TAKIS PHOTIADES, Plaintiff, v. THE DIRECTOR OF PORTS AND MARSHAL OF THE ADMIRALTY COURT, Defendants. {Admiralty Action No. 19/78). Contract—Sale of goods—Auction—When is the sale complete— Highest bidder refusing to comply with his undertaking to pay the amount for which he had bid—Committed a breach of the contract of sale—Liable to pay damages—Section 64 of the Sale of Goods Law, Cap, 267. Damages—Breach of contract—Measure of damages—Compensation for pecuniary loss flowing from the breach—Duty to take all reasonable steps to mitigate loss—Sale of ship by auction— Highest bidder refusing topay the amount for which he had bid —Seller re-auctioning the ship and knocking her down at a lower \0 price—Seller acted in a most reasonable way in an effort to mitigate the loss—Entitled to recover the difference between the price realised at the two auctions as damagesfor breach of contract. Interest—Damages for breach of contract of sale of goods—Award of interest on the amount ofdamages—Section 3
(1)of the English 15 Law Reform (Miscellaneous Provisions) Act, 1934, applicable by virtue of sections 19(a) and 29
(2)of the Courts of Justice Law, I960 (Law 14 o/I960), and section 61 of the Sale of Goods Law, Cap. 267. On the 15th December, 1977 the defendant acting under an 20 order of the Court put up for sale by public auction motor vessel "Pegassos III" which was under arrest in the Limassol Port. The value of the ship was appraised and the reserved price was fixed at £180,000.—. The auction took place on the date 244 5 t C.I..R. 5 10 15 20 25 30 Pbotiades v. Director of Ports sofixedat which a number of persons interested were present, including the plaintiff. The auction was concluded and the defendant knocked down the ship to the highest bidder who wastheplaintiff whohad madea bid for thesum of£181,000.—. Arecordwasprepared and signed bythe Marshal and the plaintiff to the effect that the ship was knocked down to the plaintiff for thesum of£181,000.—. After thesigning of the said record the plaintiff was asked to pay forthwith the deposit of 10 per cent of the value of the ship. The plaintiff left without paying such deposit and on the following day the defendant cabled the plaintiff holding him responsible for the amount due. The plaintiff refused to pay, alleging that the auction was null and void and not properly conducted and that in any event he did not bid personally but as an agent of a group of companies. The defendant repudiated such allegations and informed the plaintiff that in view of his refusal to comply with the agreement, hewasintending to re-auction the ship,holding the plaintiff responsible for any damage which might occur as a result of such refusal. The new auction was published in the daily newspapers and plaintiff was also informed abount it, as well as other personswho wereinterested in the purchase of theship. The new auction was effected on the 4th January, 1978at which a number of interested bidders attended, and the ship was knocked down to the highest bidder, a certain Farouk Soultan, for the sum of £103,000.—. The defendant brought all the facts to the notice of the Attorney-General for necessary action to be taken in the case but inthemeantime theplaintifffiledthepresent action whereby he claimed for a declaration that the public auction forthesale of M/V Pegassos III held by defendant at Limassol on the 15th December, 1977and the subsequent knocking down of the said shiptoplaintiffis nullandvoid and ofno legaleffect whatsoever, and for an order oftheCourt settingasidethesaleand knocking down of the said ship at the price of £181,000.—. 35 Byhisdefence the defendant denied the allegations of plaintiff and counterclaimed against him for £78,000.—, being the difference between the price for which the ship was sold to plaintiff andthepricerealised atthesecondauctionasdamagesforbreach of contract of sale. 40 After repeated adjournments at the request of plaintiff the 245 Photiades τ. Director of Ports
(1982)action was fixed for hearing on the 29th March, 1982; and as plaintiff failed to appear at the hearing Counsel for defendant, exercising his rights under the Rules of Court, applied for the dismissal of the action for want of prosecution and for leave to proceed with his counterclaim against the plaintiff. Thereupon theplaintiff's actionwas dismissed with costs anddefendant proceeded to prove his counterclaim against the plaintiff. 5 On thecounterclaim: Held,
(1)thata saleis completewhentheauctioneerannounces its completion by the fall of the hammer or in other customary 10 manner; and, until such announcement is made, any bidder may retract his bid (see section 64 of the Sale of Goods Law, Cap. 267); that sales by auction are subject to the general law relating tothesaleof goods;thatinthiscasetheCourtis satisfied that thesalehad beer concludedand this fact was acknowledged 15 by the plaintiff in writing; that by nis refusal to comply with his undertaking to pay theamount for which he had bid at the auction, the plaintiff has committed a breach of the contract of sale and, therefore, he is liable to pay damages.
(2)That under the general principles of contract, it is well 20 settled that the person who has proved a breach of a bargain must be compensated for the pecuniary loss flowing from such breach; that it is also well settled that such person has a duty to take all reasonable steps to mitigate loss consequent on the breach (see, inter alia, BritishWestinghouse Electric and Manu- 25 facturing Co. Ltd. v. Underground ElectricRailways Company of London[1912] A.C. 673 (H.L.); that defendant acted in the most reasonable way in the circumstances of the case in an effort tomitigate theloss,consequentonbreach,by re-auctioning the ship; that the defendant has proved that the amount of 30 damages which resulted is £78,000 and, therefore, he is entitled to recover from the plaintiff such amount.
(3)That interest may be awarded to the defendant on the amount claimed (see section 3
(1)of the English Law Reform (Miscellaneous Pro\isions) Act, 1934 applicable by virtue of sections 19(a) and 29
(2)of the Courts of Justice Law, 1960 (Law 14/1960) and section 61 of the Sale of Goods Law, Cap. 267); that though the cause of action in this case arose at the moment when the plaintiff repudiated the agreement which was 246 35 1 C.L.R. 5 Photiades v. Director of Ports the 15th December, 1977, in the circumstances it is reasonable to award interest as from thedatewhen the second auction took place, that is, the 4th January, 1978; that such interest is fixed at therate of 7 per cent per annum as from 4th January, 1978 till today and.legal interest as from today till payment. Judgmentfor defendant on his counterclaim for £78,
  1. 10 Cases referred to: British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground ElectricRailways'Company of London[1912] A.C. 673; Bellingham v. Dhillon[1973] 1 All E.R. 20; Nadreph Ltd. v. Willmett [1978] 1 All E.R. 746; Levison v. Farin [1978] 2 All E.R.
  2. 15 Admiralty action. Admiralty action for a declaration that the public auction for the sale of the M/V Pegassos Τ1Ϊheld by defendant and the subsequent knocking down of the said ship is null and void and for an order setting aside the sale and knocking down 20 of the said ship at the price of £181,000.—. No appearance for the plaintiff. R. Gavrielides,Senior Counsel of the Republic, for the respondent. Cur. adv. vult. 25 SAVVIDES J. read the following judgment. Plaintiff's claim, in this action is for a declaration that the public auction for the sale of M/V Pegassos III held by defendant at Limassol on the 15th December, 1977 and the subsequent knocking down of the said ship to plaintiff is null and void and of no legal effect 30 whatsoever, and for an order of the Court setting aside the sale and knocking down of the said ship at the price of £181,000.—. The defendant in this case ;s the Director of Ports who was also at the material time the Marshal of the Admiralty Court. The facts of the case are briefly as follows: 35 On the 15th December, 1977 the defendant acting under an order of the Court put up for sale by public auction motor vessel Pegassos III which was under arrest in the Limassol 247 SawWes J. Photiades v. Director of Ports
(1982)Port. The value of the ship was appraised and the reserved pricewasfixedat£180,
  1. Theauctiontook placeonthedate sofixedat which a number of persons interested were present, including the plaintiff. The auction was concluded and the defendant knocked down the ship to the highest bidder who 5 wastheplaintiff whohadmadeabidforthesumof£181,000.—. A recordwasprepared and signedbythe Marshal andtheplaintiff to the effect that the shipwas knocked down to the plaintiff for thesum of£181,000.—. After thesigningofthesaidrecord the plaintiff was asked to pay forthwith the deposit of 10 per 10 cent ofthe value of the ship. The plaintiff left without paying such deposit and on the following day the defendant cabled the plaintiff holding him responsible for the amount due. The plaintiff refused to pay, alleging that the auction wasnull and void and not properly conducted and that in any event he did 15 not bid personally but as an agent of a group of companies. The defendant repudiated such allegations and informed the plaintiff that in viewofhisrefusal to complywiththeagreement, hewasintendingtore-auclion theship,holdingtheplaintiff responsible for any damage which might occur as a result 20 of such refusal. The n^w auction was published in the daily newspapers and plaintiff was also informed about it, as well as otherpersonswhowereinterested inthepurchaseoftheship. The newauction waseffected onthe4th January, 1978atwhich a number of interested bidders attended, and the ship was 25 knocked down to the highest bidder, a certain Faiouk Soultan for the sum of £103.000.—. The defendant brought all the facts to the notice of the Attorney-General for necessary action to be taken in the case but in the meantime the plaintiff filed the present action. 30 It izthe allegation of the plaintiff, according to the petilion, that there were irregularities at the sale, particulars of which are set out in paragraph 4(a) of the petition, such as that the auctionandbiddinghad beeninterrupted for 15 minuteswithout any lawful justification, that when the plaintiff arrived there 35 the Marshal asked him whether he was going to bid over the sum of £180,000.—which made him form the impression that there werealready biddersfor that amount,whereasthat amount was the reserved pricefixedby the Court and he was the only bidder over and above that amount; also, that the sale was 40 248 1 C.L.R. Photiades v. Director of Ports Sawides J. concluded at a speed, although there were still other bidders present ready to take part in the auction. It is also alleged in the alternative that the sale was null and void in view of the fact that although plaintiff mentioned to the defendant that 5 he was not bidding in his personal capacity but on behalf of a joint venture of one of the companies of Photos Photiades in co-operation with another foreign company, the defendant recorded in the minutes that the plaintiff was bidding for his own account. It is further alleged that the.defendant took 10 advantage of the state of confusion prevailing and knocked down the ship to the plaintiff personally, giving notime to him to concentrate and record down that hewas acting as an agent. Upon realising his mistake, the plaintiff some time after the signing of the record protested to the defendant that he was 15 misled and informed him that he was withdrawing his bid, but defendant refused to allow him to do so. For the said reasons, the plaintiff filed the present action claiming the remedies set out in the writ of summons. Byhisdefence thedefendant denied theallegationsof plaintiff 20 and counterclaimed against him thedifference between the price for which the ship was sold to plaintiff and the price realised at the second auction as damages for breach of contract ofsale. In view of the fact that there was an allegation by plaintiff in hispetitionthathewasbiddingasanagentofPhotosPhotiades, 25 the defendant joined as a party in the counterclaim, Photos Photiades as defendant 2, and counterclaimed against him, in the alternative, the damages incurred. After severaladjournments attherequestofplaintifftheaction came up for hearing on the 20th January,
  2. Counsel 30 appearingfor plaintiff wasabsent abroad onthedayandcounsel appearing for him applied for a further adjournment to enable counselhandlingthecaseappear beforetheCourt. Thefollowing remarks appear in the record of the Court on that day: 35 "This case has been pending for a long time and it is with great reluctancethat Ishallgrantthisverylast adjournment on the following condition: That if on the new date of hearing counsel for plaintiff is not ready to prosecute his case, then the action will be dismissed and the defendant will be at liberty to proceed with his counterclaim on that 249 Sawides J. Photiades v. Director ofPorts
(1982)day. Counsel,therefore, for plaintiff should make arrangements that in case he will not be available on the.day of hearing for one reason or another, to instruct in time another advocate to appear on his behalf to proceed with the case". 5 The hearing was, as a result, adjourned to the 24th of February, 1982 when counsel for plaintiff and defendants in the counterclaim appeared and applied for leave to withdraw, as according to what he alleged there was a conflict of interest between the two defendants in the counterclaim which had 10 led to litigation between them and, therefore, he could not appear for either of them. Plaintiff was present on that day and heagreed withthestatement madebyhiscounseland applied for an adjournment to instruct another advocate to appear in this case and Mr. L. Clerides undertook to inform Photos 15 Photiades, defendant 2 in the counterclaim, about the new date of hearing. The Court granted the adjournment with great reluctance and the following was stated by the Court: "There have been repeated adjournments in this case at the instance of plaintiff on all occasions, and I made certain 20 observation on the 20th of January, 1982 about the undesirability of these adjournments. In fact, on such date, there was an express direction that if plaintiff was not ready to prosecute the case, the action would have been dismissed and the defendant would have been at liberty to proceed 25 with his counterclaim on that date. In view, however, of the new developments, which have been explained to daybycounselfor the plaintiff and oncethereisno objection on the part of the defendant and the interested party, I shall grant this adjournment but I wish to point out to 30 the plaintiff that he must come ready for hearing with his new counsel whom he has to retain, as soon as possible, on the new date of hearing, and, also, on the undertaking by Mr. L. Clerides to inform defendant 2 in the counterclaim to act accordingly. If plaintiff and both defendants 35 in the counterclaim fail to act accordingly, the defendant in the present case is at liberty to take any course he will deem necessary in the circumstances of the case". On the 29th March, 1982, neither the plaintiff who was also defendant 1 in the counterclaim, nor defendant 2 in the counter250 40 1 CX.R. Photiades v. Director of Ports Sawides J. claimappearedatthehearing. Counselfor defendant exercising his rights under the Rules of Court, applied for the dismissal of the action for want of prosecution and for leave to proceed with hiscounterclaim against plaintiff, asking leaveto withdraw 5 thecounterclaim againstdefendant 2inthecounterclaimwithout prejudice. In the result, the plaintiff's action was dismissed with costs in favour of defendant and also the defendant's counterclaim against defendant 2 was also dismissed with no order for costs and defendant proceeded to prove his counter10 claim against the plaintiff. A witness testified for defendant who produced the record of the minutes of the auction dated 15th December, 1977which was signed by the plaintiff and the defendant (exhibit 1). Also a letter dated 30th December sent totheplaintiff, wherebyplaintiff's allegationsagainstthevalidity 15 of the auction are repudiated (exhibit 2). The record of the second auction dated 4th January, 1978 as to the sale of the ship to one Farouk Soultan for the sum of £103,000.—was also produced (exhibit 3). The witness who was present at the first auction, assisting the defendant, described the circum20 stances under which the auction took place. He related that the plaintiff had rang from Nicosia requesting that the auction be postponed for 15 minutes to give him the chance to arrive from Nicosia and the defendant agreed to that and waited till his arrival. After the arrival of the plaintiff the defendant 25 personally and through the auctioneer brought to the notice of all persons interested that the reserved price for the ship was £180,000.—and that anybody who was interested had to bid over that amount and that each bid should not be for less than £500.— every time. 30 Plaintiff bid for £181,000.—and as he wasthe highest bidder the ship was knocked down to him for that amount. After theconclusion oftheauction the defendant prepared the record whichwassignedbythedefendant, theplaintiff andthewitness, affirming the sale of the shiptothe plaintiff. Then the plaintiff 35 wasaskedto pay the deposit whichwas 10per cent of the purchase value but he failed to do so. About ten minutes later, the plaintiff came back to the defendant and alleged that he was under the impression that he was bidding in dollars and not in Cyprus Pounds and said that he did not want the ship 40 and he did not consider himself bound by the auction. The defendant toldhimthatithadbeenmadeclearduringtheauction 251 Sawides J. Photiades v. Director of Ports
(1982)that the price was in Cypius Pounds and that no sale could be effected at a public auction in foreign currency and drew his attention to the fact that he was bound by the agreement and that he was holding plaintiff responsible for any damage which might result from such breach. Plaintiff left and as a 5 result ofhisrefusal tocomplywiththeagreement,the defendant for the purpose of mitigating the loss, proceeded to re-auction the ship, informing the plaintiff and all other personswhowere present in the first auction and other interested parties, about such course and the date when the new auction was to take 10 place and also after having published notice of such auction in the local press. The new auction took place on the 4th January, 1978 at which, according to exhibit 3, a number of biddersattended,amongstwhomwasthebrother ofthe plaintiff, ex-defendant 2 in the counterclaim, and the ship was knocked 15 down at such auction to one Farouk Soultan for £103,000.— which was the highest bid. As a result, there was a deficit between the price at which the ship was knocked down to the plaintiff inthefirstauctionandtheamountrealisedatthesecond auction, which amounted to £78,000.—, and this isthe amount 20 of damages counterclaimed by defendant against the plaintiff. Under the Sale of Goods Law, Cap. 267, section 64, in the case of a sale by auction, "the sale is complete when the auctioneer announces its completion by the fall of the hammer or in other customary manner; and, until such announcement 25 is made, any bidder may retract his bid". Salesby auction are subject to the general law relating to the sale of goods. In the present case, I am satisfied that the sale hadbeenconcludedandthisfact wasacknowledgedbytheplaintiff in writing. By his refusal to comply with his undertaking 30 to paytheamount for whichhehadbidattheauction,theplaintiff hascommitteda breachofthecontract ofsaleand, therefore, he is liable to pay damages. Under the general principles of contract, it is well settled that the person who has proved a breach of a bargain must 35 becompensated for thepecuniary lossflowingfrom suchbreach. It is also well settled that such person has a duty to mitigate loss consequent on the breach. Such principles are enunciated with clarity in British Westinghouse Electric and Manufacturing Co. Ltd. v. Underground Electric Railways Company of London 40 252 1 CL'.R. Photiades τ. Director of Ports Sawides J. [1912] A.C. 673 a Houseof Lords decision whereViscount Haldane, L.C. had this to say: 5 10 15 20 25 30 "1 think that there are certain'broad principles which are quite well settled. The first is that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed. Thefundamental basisis thus compensationfor pecuniary lossnaturallyflowingfrom thebreach;butthisfirstprinciple is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable steps to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps __ __ , _ this second principle does not impose on the plaintiff an obligation to take any step which a reason­ able and prudent man would not ordinarily take in the course of his business. But when in the course of his business he has taken action arising out of thetransaction, which action has diminished his loss, the effect in actual diminution of the loss he has suffered may be taken inio account even though there was no duty on him to act". The above dictum was applied in 'Bellingham v. Dhillon [1973] 1 All E.R. 20, Nadreph Ltd. v. Willmett [1978] 1 All E.R. 746, Levison v. Farin [1978] 2 All E.R. 1149. In the present case 1 find that defendant acted in the most reasonable way in the circumstances of the case in an effort to mitigate the loss, consequent on breach, by re-auctioning the ship. On the evidence before me and the various documents produced, I am satisfied that the defendant has proved that the amount of damages which resulted is £78,000.—, and, therefore, 35 he is entitled to recover from the plaintiff such amount. I am now coming to consider theclaim of plaintiff for interest. Under section 61 of Cap. 267, provision is made for thepayment of interest by way of damages and special damages as follows: 253 Sawides J. Photiades v. Director of Ports.
(1982)"61
(1)Nothing in this Law shall affect the right of the seller or the buyer to recover interest or special damages in any case where by law interest or special damages may be recoverable, or to recover the money paid where the consideration for the payment of it has failed. 5
(2)In the absence of acontract to thecontary, the Couit mayawardinterestatsuchrateasitthinksfitontheamount of the price— (
  1. a)to the seller in an action by him for the amount of the price—from the date of the tender of the 10 goods or from the date on which the price was payable; (
  2. b)to the buyer in an action by him for the refund of the price in a case of a breach of the contract on the part of the seller—from the date on which 15 the payment was made". Under the English Law Reform (Miscellaneous Provisions) Act, 1934, section 3
(1), it is provided as follows: "3.-(
  1. l)In any proceedings tried in any Court of Record for the recovery of any debt or damages, the Court may, 20 if it thinks fit, order that thereshall beincluded in thesum for which judgment is given interest at such rate as it thinks fit on the whole or any part of the debt or damages for the whole or any part of the period between the date whenthecauseofactionaroseandthedateofthejudgment: 25 Provided that nothing in this section—. (
  2. a)shall authorisethegivingofinterest upon interest; or (
  3. b)shall apply in relation to any debt upon which interest is payable as of right whether by virtue 30 of any agreement or otherwise; or (
  4. c)shall affect the damages recoverable for the dishonour of a bill of exchange". Under the provisions ofsections 19(a)and 29
(2)ofthe Courts of Justice Law, 1960 (Law 14/1960), the Supreme Court in the 35 exercise of its admiralty jurisdiction shall apply the law and 254 1 C.L.R. Photiades v. Director of Ports Sawides J. practice applicable in the High Court of England in the exercise of its admiralty jurisdiction. By virtue of such provision the provisions under section 3
(1)of the Law Reform (Miscellaneous Provisions) Act 1934 which is applicable in England in any 5 proceedings tried in any Court of Record (which includes the -Admiralty Court), is extended to Cyprus. Therefore, interest may be awarded o n ' the amount claimed. Though the cause of action in this case arose at the moment when the plaintiff repudiated the agreement whichwasthe 15th Decembei, 10 1977, in the circumstances I find it reasonable to award inte.est as from the date when the second auction took place, that is, the 4th January,
  1. I fix such interest at the rate of 7 per cent per annum as from 4th January, 1978 till today and legal interest as from today till payment. Plaintiff also to pay the 15 costs of the defendant on the amount recovered on the counterclaim. 20 In the result, judgment is given on the counterclaim in favour of defendant and against the plaintiff in the sum of £78,000.— with interest at 7 per cent per annum as from the 4th January, 1978till today and with legal interest asfrom today till payment. Plaintiff to pay also the costs of the counterclaim. Plaintiff's claim against defendant stands as already dismissed with costs in favour of defendant. Defendant's counterclaim against defendant 2in the counterclaim stands as already dismis25 sed with no order for costs. Judgment on the counterclaim for defendant and against the plaintiff in the sum of £78,
  2. 255

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