[2016] JMCA Civ 22
JAMAICA
IN THE COURT OF APPEAL
SUPREME COURT CIVIL APPEAL NO 15/2012
BEFORE: THE HON MISS JUSTICE PHILLIPS JA
THE HON MRS JUSTICE SINCLAIR-HAYNES JA
THE HON MR JUSTICE F WILLIAMS JA (AG)
BETWEEN THOMAS HAMILTON & ASSOCIATES LIMITED APPELLANT
AND DIGICEL (JAMAICA) (MOSSELL) LIMITED
(T/A DIGICEL) RESPONDENT
Keith Bishop and Andrew Graham instructed by Bishop & Partners for the
appellant
Maurice Manning and Miss Michelle Phillips instructed by Nunes Scholefield
Deleon & Co for the respondent
15, 16 December 2015 and 29 April 2016
PHILLIPS JA
[1] I have read in draft the judgment of my sister Sinclair-Haynes JA. I agree with
her reasoning and conclusion and have nothing to add.
SINCLAIR-HAYNES JA
[2] On 26 October 2011, King J dismissed Thomas Hamilton & Associates Limited’s,
(the appellant) claim against Digicel (Jamaica) (Mossel) Limited, trading as Digicel, (the
respondent), for wrongful and premature termination of a service contract, and
awarded costs to the respondent to be agreed or taxed. The learned judge also non-
suited the respondent in respect of its counter claim but refused to award the appellant
costs on the respondent’s counter claim. This is an appeal from that order.
Background
[3] By virtue of two written contracts, the appellant, an electrical engineering
contractor agreed with the respondent, a telecommunications company which provides
cellular telephone services to Jamaica and other Caribbean countries to provide routine
maintenance and refueling of all its generator sets, at various cell sites in Jamaica. The
duration of each contract was for one year. The first contract commenced on 1 June
2004 and expired on 31 March 2005. The second contract was commenced on 1 April
2005. It was however signed in June 2005 and expired on 31 March 2006.
[4] At the expiration of the first contract, and prior to the signing of the second
contract, the appellant continued to provide maintenance and refueling services for the
respondent’s generators and was duly remunerated. Upon the expiration of the second
contract on 31 March 2006, the appellant continued to maintain the respondent’s
generators until 29 May 2006, when by way of letter dated 29 May 2006, the
respondent ended that arrangement. The termination became effective at 1 June 2006.
[5] Its contract was however not renewed. There is an irreconcilable divergence in
the evidence for the appellant and the respondent as to the reason the appellant
continued to service the respondent’s generators after the expiration of the second
contract.
The appellant’s version
[6] The appellant claims that it had a legitimate expectation that it would remain in
the contract for at least another year. According to the appellant, prior to the
expiration of the contract, it organized to remove its equipment and workmen from the
respondent’s property, but was “encouraged” by Mr Lincoln Brown, the respondent’s
electro-mechanical manager, who was acting as its agent to continue to perform the
service contract.
[7] Sometime in March 2006, at a meeting, with the respondent and the appellant’s
agent, Mr Thomas Hamilton, Mr Hamilton informed the respondent that the appellant
had received information that the appellant’s service would have been
“unceremoniously replaced”. He however received no confirmation.
[8] By continuing, the appellant contends that it acted to its detriment by:
(1) making firm contractual agreement with a landlord to house the
workers and office;
(2) making and agreeing contracts with technical employees for an
additional year of work;
(3) paying insurance premium for one year’s coverage;
(4) providing refueling tanks at strategic locations to the cell sites;
(5) employing and training a cadre of workers with the ability to
respond to any emergency situation required by the contract
(Damon Scott and Steve Edwards as supervisors, and Nocander
Douglas, Steve Brown and Orville Robinson as technicians);
(6) owning and maintaining three specialized trucks and other pieces
of equipment for serving of the generators;
(7) stocking parts as was required under all previous contracts; and
(8) obtaining insurance coverage with a limit of liability of
$10,000,000.00 at a premium of $100,000.00.
[9] He further complained that he suffered loss of income by not “seeking to engage
in new or additional employment since the claimant was expected to remain in contract
for at least another year”. The appellant was expected to earn more than it earned the
previous year. Consequently, the appellant claimed the following:
a. The sum $1,764,909.14 which represents spare parts acquired
pursuant to contract between the parties;
b. The sum of $330,000.00 for office and lodging in the
western region;
c. The sum of $32,914,306.34 for loss of income;
d. The sum of $1,833,595.00 for salary and wages to workers;
e. The sum of $100,000.00 paid for insurance premium;
f. The sum of $1,000,000.00 for fuel and storage tank;
g. Interest at the commercial rate on all sums due;
h. Attorneys-at-Law costs; and
i. Costs.
The respondent’s version
[10] The respondent resisted the claim. It trenchantly refuted the appellant’s
assertion that pursuant to the contract it stocked items which amounted to
$1,764,909.17. It further stated that it was not liable to the appellant for stocking
items to perform its contract.
[11] It was the respondent’s contention that it was dissatisfied with the performance
of the appellant. On 31 March 2005, the end of the first contract year, the appellant’s
performance was evaluated and the appellant was informed of the respondent’s
dissatisfaction with its performance. So as to secure a renewal of the contract, the
appellant agreed to remedy the deficiencies. On that understanding, the contract was
renewed.
[12] The respondent further contended that during the second contract period, the
appellant was again advised that its performance was deficient. Consequently, on 16
February 2006, shortly before the second contract period ended, representatives of the
appellant and respondent met in respect of the appellant’s deficient performance. The
appellant was advised that because of its unsatisfactory performance it was unlikely
that the contract would be renewed.
[13] Pending the final evaluation, the appellant continued to provide its services on a
month-to-month basis. It was never represented to the appellant that the monthly
extension of the contract guaranteed its renewal. Any obligation which the appellant
undertook for a period in excess of one month from the date the contract expired was
at its own risk.
[14] The respondent also counterclaimed and alleged that consequent on the
appellant’s refusal to either complete installation or properly service its generators, it
“suffered loss of down time and revenue in respect of its cell sites”. It claimed that the
downtime and losses were a “result of the [appellant’s] breach of its contractual
obligations and/or negligence”. According to the respondent, the appellant was in
breach of the contract and or was negligent in that it failed to:
a. employ adequate trained and skilled personnel;
b. service and/or maintain the Defendant’s generators;
c. keep sufficient parts and equipment in stock;
d. respond adequately to service calls;
e. properly manage and supervise its technicians; and
f. install and commission sites as required under the agreement.
[15] The appellant, in its response to the respondent’s defence and counter claim,
denied that the respondent provided it with a written report in which it expressed its
dissatisfaction with its performance. It asserted that it was subject to two performance
appraisals by the respondent. It was graded on a scale of one to five, five being the
highest. There were six areas of appraisal and the appellant was assessed as grade
three in three areas and grade four in the other three. The appellant also averred that
the only disagreement between the parties in the meeting of 16 February 2006 was in
respect of the purchase price of a battery charger which the appellant had imported
and sold to the respondent.
[16] It averred that its agent had raised a concern with the appellant about a rumour
that it would be replaced, but the agent for the respondent neither admitted nor denied
the rumour. The appellant denied that the respondent suffered loss in respect of its cell
sites as a result of the appellant’s failure to properly manage them.
The learned judge’s findings
[17] This court does not have the benefit of the learned judge’s written reasons. The
exchanges between the learned judge and counsel for the appellant are however
helpful in discovering the learned judge’s thought process.
[18] At pages 16 and 17 of the supplemental record of appeal, were the following
exchanges between the learned judge and counsel Mr Bishop:
“HIS LORDSHIP: Mr. Bishop, I will be frank with you and
the biggest hill that you have, you have
pleaded and defended upon a cause of
action which can only assist you by to
do what you ask me to do, which is to
stretch and adopt a Public Law into a
Private Law for the first time. And I am
not - I am not at all hesitant to break
new ground if it serves fairness, but it is
not just for the sake of breaking ground.
One has to look at the history and
genesis of those two from legitimate
expectation and if one traces that, you
see that though there are similarities,
they are not related at all. The doctrine
on legitimate expectation was born in
Common Law. It was born in - born in
that area and there is nothing which will
justify it being moved across.
HIS LORDSHIP: And further even if you had started off
as estoppel, you would still have had
certain difficulties in relation to what
you must establish in order to defend
upon . I will certainly listen to whatever
you want to offer me by way of
persuasion, but I am telling you the
areas of difficulty I see you have so that
you can tackle yours and see if you can
get past them. Because if you can’t, all
this effort that you spend on the issue
of damages is expending energy in
vain.”
[19] At page 49 to 551 of the further supplemental record of appeal, the learned
judge said:
“Judge: Does Defendant have an obligation to even do
an evaluation much less allow Claimant to
participate in it?
A At March 2006, Claimant was still required to
attend to all services
Judge: Did your client have any legal obligation to
perform after March 2006?
A No, but look at what transpired. Look at
Amended Particulars of Claim. My client
threatened to leave.
Judge: Even if he threatened to leave he could also
change mind and stay.
Judge: But what is contractual basis for staying. He
acted to his detriment by keeping employees in
the region.
Judge: He knows he doesn’t have a contract and there
is no obligation to give a contract. At end of
evaluation period on his own evidence he may
not get a contract. That is a chance he is
taking.
Keith Bishop Having regard for 1
st
year - he held over and
was paid on invoices for work done. It gives
rise to a legitimate expectation.
Judge: If you are depending on then plead it, then
Defendant knows what case to meet. But you
plead legitimate expectation – then he
approaches case differently.
Keith Bishop I could draw a parallel to fraud. But I see
cases from this Court that say you don’t have
to plead fraud
Amended Particulars – paragraph 13 leave no doubt – that
employee was about to leave and by remaining had to put in
place insurance, housing, spare parts.
MCGREGOR ON DAMAGES CITED:
Judge: That is an employee case which employee has
obligation to work only for employer.
Judge: Even if you started off as estoppel , certain
difficulties in order to establish dependency on
estoppel
Companies have legal advisors of state of law:
If there being no written contract you have no
legal obligation to offer a contract, they act on
certainty of law as is this, they act on that
advice.
Is it fair to change? I’m not unsympathetic to
plight of claimant. Perhaps most businessmen
would do same. It was a chance to get a
contract. It remained a chance - no certainty.
It may be a reasonable business decision but
in law it does not enable a claim.
RULING:
On claim – judgment to Defendant with costs to be agreed
or taxed.
On counterclaim, the Defendant is non-suited with no order
as to costs.”
The appeal
[20] The appellant expressed its dissatisfaction with the learned judge’s decision by
filing the following ground of appeal:
“The learned judge erred in finding that the words
‘legitimate expectation’ can only be used in public law and
never used in private law although they were used by the
Appellant in the Particulars of Claim and witness statement
to describe the state of mind of the Appellant’s
agent/servant who was asked to remain on the job and
perform the required tasks for and on behalf of the
Appellant.”
The appellant also challenges the learned judge’s findings of fact and law:
“The mention of the words ‘legitimate expectation’ are
confined to public law and cannot be used in private law as
was used by the appellant.”
[21] Mr Bishop argued that the use of the words “legitimate expectation” bears a
particular meaning when used in public law but there is no bar or injunction for the use
of the words in private law. It was his submission that when the words are used in
private law, they should be given their ordinary meaning. The judge he argued, was
wrong in finding that the words ‘legitimate expectation’ refer only to the public law
concept. He said public law does not own those words when they are used together.
[22] Mr Bishop posited that the concept of legitimate expectation arises from
administrative law, which is a limb of public law, it is generally used in judicial review
and it applies to fairness and reasonableness. The doctrine he said, used in public law,
imposes a duty on the public body to give a fair hearing. It extends the protection of
natural justice or fairness. Persons may generally claim a benefit or privilege under the
doctrine which he posited, arises from an expressed promise or the existence of regular
practice.
[23] It was his submission that the appellant’s attempt to remove its workers and
equipment was halted by the respondent’s agent who encouraged the appellant to
remain and to continue performing the contract of service and refueling of the
generators “with the legitimate expectations by the [Claimant] that it would be offered
a contract for another year”.
[24] He argued that it was clear that the appellant gave the words their ordinary
meaning. No issue he said was raised in the defence that the appellant was relying on
a public law doctrine in private law. The defendant merely denied the appellant’s
allegations of legitimate expectations. He said the word ‘legitimate’, was used by the
appellant in his evidence in chief, but there was no mention or use of those words in
cross-examination.
[25] He pointed out that the learned judge made reference to the words at page 12
by asking counsel whether he was saying that payment of invoices during the period
the appellant held over gave rise to a legitimate expectation of a new contract. He said
counsel responded in the affirmative.
[26] Counsel complained that the learned judge failed to analyze and weigh the
evidence of both cases and did not determine the matter by applying the required
standard. He referred the court to Stuart Sime’s work, A Practical Approach to Civil
Procedure, fifteenth edition. The learned judge, he said, focused entirely on legitimate
expectations and decided accordingly. He submitted that the learned judge was wrong
in law, because the issue was never raised in the defence. The respondent merely
denied that the appellant had a legitimate expectation, but did not state that the words,
when used together were only applicable to public law.
The respondent’s submission
[27] The respondent resolutely resisted the appeal and contended that the words
“legitimate expectation” are confined to public law and therefore cannot be used in
private law as used by the appellant. In support of that proposition Mr Manning referred
the court to the cases of O’Reilly v Mackman [1982] 3 All ER 1124; CCSU v
Minister for the Civil Service [1984] 3ALL ER 935; Josie Rowland v The
Environment Agency [2003] EWCA Civ 1885; Pennock v United Farmers of
Alberta Co-operative Limited 2008 ABCA 278; Attorney General of Hong Kong v
Ny Yuen Shiu [1983] 2All 346 and Ex Parte Reprotech [2002] UKHL8.
Discussion/Analysis
[28] The issues determinative of the matter are:
(a) Whether the public law concept of legitimate expectation
grounds a cause of action in private law?
(b) If the answer is in the affirmative, whether the appellant had a
legitimate expectation that its contract would be renewed;
(c) Was the appellant’s contract wrongfully terminated?
Discussion
Is the concept “legitimate expectation” applicable to private law?
The law
[29] The orthodox rule is that ‘legitimate expectation’ is a public law concept which is
inapplicable to private law. That there is a dichotomy between private law and public
law in respect of the applicability of the concept ‘legitimate expectation’ was made plain
by Lord Diplock’s following enunciations in the House of Lord’s decision of O’Reilly v
Mackman [1982] 3 All ER 1124 at page 1126:
“It is not, and it could not be, contended that the decision of
the board awarding him forfeiture of remission had infringed
or threatened to infringe any right of the appellant derived
from private law, whether a common law right or one
created by statute. Under the Prison Rules remission of
sentence is not a matter of right but of indulgence. So far
as private law is concerned all that each appellant had was a
legitimate expectation, based on his knowledge of what is
the general practice, that he would be granted the maximum
remission, permitted by r 5(2) of the Prison Rules, of one
third of his sentence if by that time no disciplinary award of
forfeiture of remission had been made against him. So the
second thing to be noted is that none of the appellants had
any remedy in private law.
In public law, as distinguished from private law, however,
such legitimate expectation gave to each appellant a
sufficient interest to challenge the legality of the adverse
disciplinary award made against him by the board on the
ground that in one way or another the board in reaching its
decision had acted out with the powers conferred on it by
the legislation under which it was acting; and such grounds
would include the board’s failure to observe the rules of
natural justice: which means no more than to act fairly
towards him in carrying out their decision-making process,
and I prefer so to put it.”
[30] The statement of Lord Fraser in the Privy Council case Attorney General of
Hong Kong v Ng Yuen Shiu [1983] 2 All ER 346, an appeal from Hong Kong certainly
confirmed that position. In determining whether an alien had a legitimate expectation
that his case would be treated on its merits, that announcement having been made by
the Hong Kong government, at page 351, Lord Fraser had this to say:
“Their Lordships see no reason why the principle should not
be applicable when the person who will be affected by the
decision is an alien, just as much as when he is a British
subject. The justification for it is primarily that, when
a public authority has promised to follow a certain
procedure, it is in the interest of good administration
that it should act fairly and should implement its
promise, so long as implementation does not
interfere with its statutory duty. The principle is also
justified by the further consideration that, when the promise
was made, the authority must have considered that it would
be assisted in discharging its duty fairly by any
representations from interested parties and as a general rule
that is correct.
In the opinion of their Lordships the principle that a
public authority is bound by its undertakings as to
the procedure it will follow, provided they do not conflict
with its duty, is applicable to the undertaking given by the
government of Hong Kong to the respondent, along with
other illegal immigrants from Macau, in the announcement
outside Government House on 28 October 1980, that each
case would be considered on its merits.” (Emphasis
supplied)
[31] In the English House of Lords decision, R v East Sussex County Council,
(Appellant’s); Ex parte Reprotect (Pebsham) Ltd and One Other Action [2002]
UKHL 8 (28
th
February, 2002), Lord Hoffmann, with whom the court agreed, plainly
confined the concept to public law. He said:
“In any case, I think it is unhelpful to introduce private law
concepts of estoppel into planning law. As Lord Scarman
pointed out in Newbury District Council v Secretary of
State for the Environment [1981] 578,616, estoppels
bind individuals on the ground that it would be estoppel
unconscionable for them to deny what they have
represented or agreed. But these concepts or private law
should not be extended into “the public law of planning
control, which binds everyone.” (See also Dyson J in R v
Leicester City Council ex p Powergen UK Ltd [2000]
JPL 629, 637.) There is of course an analogy between a
private law estoppel and the public law concept of a
legitimate expectation created by a public authority, the
denial of which may amount to an abuse of power: see R v
North and East Devon Health Authority, ex parte
Coughlan [2001] QB 213. But it is no more than an
analogy because remedies against public authorities also
have to take into account the interests of the general public
which the authority exists to promote. Public law can also
take into account the hierarchy of individual rights which
exist under the Human Rights Act 1998, so that, for
example, the individual’s right to a home is accorded a high
degree of protection (see Coughlan’s case at pp 254-255)
while ordinary property rights are in general far more limited
by considerations of public interest: see Alconbury.
35. It is true that in early cases such as the Wells case
and Lever Finance Ltd v Westminster (City) London
Borough Council [1971] QB 222, Lord Denning MR used
the language of estoppel in relation to planning law. At that
time the public law concepts of abuse of power and
legitimate expectation were very undeveloped and no doubt
the analogy of estoppel seemed useful. In the Western
Fish the Court of Appeal tried its best to reconcile these
invocations of estoppel with the general principle that a
public authority cannot be estopped from exercising a
statutory discretion or performing a public duty. But the
results did not give universal satisfaction: see the comments
of Dyson J in the Powergen case [2000] JPL 629, 638. It
seems to me that in this area, public law has already
absorbed whatever is useful from the moral values which
underlie the private law concept of estoppel and the time
has come for it to stand upon its own two feet.”
[32] The Privy Council decision Wendal Swann v Attorney General of Turks and
Caicos Islands [2009] UKPC 22 (21 May 2009), a case to which Mr Bishop referred
the court, in support of his contention that the words ‘legitimate expectation’, can be
used in private law seemingly counters the foregoing arguments.
[33] In light of the apparent unequivocal pronouncements which were made by the
judges in earlier cases on the matter, it is helpful to briefly outline the circumstances of
that case. Mr Swann held the post of chairman of the Public Service Commission of
Turks and Caicos Island (PSC). It was on a part time basis. He received an allowance as
remuneration instead of a salary. His appointment was made pursuant to the
Constitution.
[34] Two years later, he was reappointed for a further two years by the Governor.
The appointment continued to be part time. Approximately 11 months after, a new
Constitution came into force and the post became fulltime. The remuneration increased
to $90,000.00 per annum.
[35] The appellant was consequently paid US $8,640.00 which amounted to
$90,000.00 per year for four months. In the middle of the fourth month, however, the
Cabinet which was presided over by the Governor, met. A decision was arrived at to
reduce the chairman of the PSC’s salary to $30,000.00. The appellant was informed
two weeks and six days after whereupon he forthwith applied for notice of application
for leave to apply for judicial review in which he sought an order,
inter alia
to quash the
decision. The Chief Justice upon hearing arguments refused the application.
[36] Lord Neuberger cited the following statement of the Chief Justice, who he said,
expressed the following concerns at paragraph 13 of his (the Chief Justice’s) decision:
“… whether the [appellant] had an arguable case that this
was a public law rather than a private law matter,…
whether in any event judicial review was appropriate if he
had an alternative remedy...and whether he had a sufficient
interest to continue with his application.”
[37] Lord Neuberger, in quoting the Chief Justice’s reasons for refusing the
application said:
“His reasons were that the appellant’s ‘essential claim [was]
for damages as a result of an alleged breach of an
agreement as it relate[d] to his salary,’ which ‘would be
enforceable by an ordinary action’, that ‘the judicial review
procedure [was] neither necessary nor appropriate’, and that
‘even if it [was] arguable that there [was] a collateral public
law issue ‘ and the appellant had sufficient interest to pursue
it, the Chief Justice ‘would exercise [his] discretion to refuse
leave in this case’ (quoting from paragraphs 29 and 30 of
the judgment).”
[38] The appellant appealed and the Court of Appeal dismissed the application. No
reason was given for the dismissal. The appellant being aggrieved appealed to the
Board. Before the Board, the issues were,
inter alia
: whether the governor was
empowered by the 2006 Constitution to determine the rate of remuneration of the
chairman of the PSC. If so, whether in arriving at a determination he was obliged to
consult or whether it was at his discretion; whether it was the legislature that had
decided the remuneration; whether the Cabinet could overrule the Governor’s decision
to pay the appellant at the rate of $90,000.00 per year; and whether there was a
binding agreement between the Governor and the appellant.
[39] The Board however only determined the procedural issue: whether the Chief
Justice was entitled to refuse the appellant’s application for leave to apply for judicial
review and to require him to issue a writ instead. In so doing, the Board indentified
“the nature and the legal basis of the appellant’s claim. Lord Neuberger expressed the
view that:
“In order to found a legal claim on that complaint, the
appellant would have to establish that he had an enforceable
right to be remunerated at the rate of $90,000 a year as
chairman of the PSC.”
[40] The Board held the view that his case was “on analysis, a classic private law
claim based on breach of contract (or, conceivably, estoppel). The Board however
accepted that it was conceivable the appellant could have mounted “an argument on
the public law ground of legitimate expectation”, although his primary argument was in
contract.
[41] In the Board’s opinion, it was not an appropriate case for judicial review. Lord
Neuberger said:
“That is primarily because his [the appellant’s] claim
is, on analysis, a classic private law claim based on
breach of contract (or, conceivably, estoppel).
Furthermore, proceeding by writ would in any event be the
more convenient course, given that a properly particularized
pleaded case would be appropriate, and discovery and oral
evidence will probably be required.
The Board accepts that the appellant may
conceivably be able to mount an argument on the
public law ground of legitimate expectation, but this
would be very much of a fallback contention. In any event,
it is a contention which would be based on the same
evidence, and indeed much of the same argument, as his
possible ground, which itself would be an alternative to his
primary argument, namely the claim in contract.” (Emphasis
supplied)
[42] The Board however was of the opinion that although the appellant “plainly [had]
a legitimate interest in maintaining a claim for about $15,000.00; and indeed, he [had]
a right to bring an action to recover that sum [it considered] that the appellant’s
complaint that he has not been paid some $15,000.00 which he is owed cannot possibly
justify investigating the public law issues which he seeks to raise in his judicial review
application”.
[43] The following view expressed by Lord Nueberger however suggests that there
may be circumstances in which a conflation of public and private law would allow the
concept to be imported into a claim in private law. The learned judge said:
“There are occasions where it may be appropriate to permit
public law issues to be raised in what is essentially a private
law claim, but they are relatively exceptional. Those
occasions would normally be where the public law issue is of
particular importance to the applicant or where they should
be aired in the public interest. However, there is no
suggestion of either of those exceptional factors applying in
this case.”
Analysis/Discussion
[44] There are certainly no exceptional factors in the instant matter. It raised no
public law issues nor was any reason advanced as to the public interest value of the
issues in this case. In light of the forgoing, I am consequently of the view that in the
circumstances of this case, the concept is inapplicable to the instant case. In my view,
in spite of the learned judge’s unmitigated rejection of the concept as being inapplicable
to private law, his finding of its inapplicability to the instant case cannot be faulted.
[45] Even if the concept “legitimate expectation” were applicable to private law, as
pointed out by Mr Manning on Mr Hamilton’s evidence, after the meeting of 16 February
2006, which was held to evaluate the appellant’s performance, Mr Hamilton did not
expect “that it would be well between the parties”. Indeed so charged was the meeting
with acrimony that Mr Hamilton, who represented the appellant at the meeting
admitted to making the following utterance:
“I said I don’t like to [expletive deleted] without kissing.”
[46] On Mr Hamilton’s evidence and the evidence of Mrs Grant Williams, who was at
the material time, the respondent’s network operations manager, it was manifest that it
was unlikely that the appellant’s contract would be renewed. The respondent’s
complaints were not limited to the issue concerning overpricing of battery chargers, but
included the duplication of invoices (page 12 of the further supplemental record of
appeal) and repairs at German Hill (page 13 of the further supplemental record of
appeal).
[47] Ms Olive Grant-Williams’, evidence was that:
“The Defendant in any given year engages the services of
several contractors to assist in maintaining its generators
and cell sites. It is the policy of the Defendant that an
evaluation for each contractor is done once per year to
assess the performance of the contractor. The evaluation of
contractors is critical, as whether or not the contract is
renewed is dependent on the outcome of the evaluation.
Contracts are not automatically renewed and an evaluation
of performance must be done before a decision is taken to
renew.
That the Defendant has a set procedure for evaluating
contractors. An evaluation form is completed by the
Defendant’s field engineers who are responsible for
monitoring and signing off on the work done by the
contractors. These field engineers usually provide managers
with a verbal report along with the evaluation forms. Based
on the assessment forms and verbal reports, the contractor
would either be warned verbally and if there was no
subsequent improvement, the contract would not be
renewed upon expiration. The evaluation period/assessment
is usually completed after the expiration of the contract
period.”
[48] Mr Hamilton’s evidence supported Mrs Grant-Williams’ that there was a period of
evaluation in February, prior to the expiration of the contract. He said:
“The period you do evaluation in February, somewhere
about there but when we are working the contract does not
come up for discussion until when they either say your
contract is renewed or not renewed, whatever work you
doing we have to do those same way, they don’t stop, also it
is just formality that you go do an evaluation.”
It was also the evidence of Mr Hamilton, the appellant’s witness, that the evaluation
was a part of the renewal process (page 29 of the supplemental record of appeal).
[49] Mr Hamilton’s evidence at pages 32 to 45 of the supplemental record of appeal,
erases any doubt that the renewal of the contract, hinged on the evaluation.
“HIS LORDSHIP: Things having happened as they have,
are you using that holding over term to
describe beyond 31
st
of March 2006 up
to when the determination took place.
The second period now, the end of the
second contract?
A If I would use it? Yes because we did
not know what it would go to. So, the
holding over period would go over to
that period into the next. Those are
period …
Q The evaluation process it if came back
unfavourable, would have meant, could
have meant no new contract would be
granted to you?
A Yes, if the evaluation period is
unfavourable then, yes but I am saying,
can I say something else?
Q well, I just wanted an answer to the
question. You said yes, it would mean
that?
A Because we didn’t get anything so we
didn’t know.
Q Okay. All right. And you knew that it
was the position at the end of the first
contract that is the consequence of an
unfavourable evaluation, you would
have known that from the end of the
first contract?
A We know all along that once that
happens you would have the evaluation
is telling you how your performance is.
So, if the performance is, once that
evaluation, you would renew that’s what
I am saying.
HIS LORDSHIP: What are you are saying, you haven’t
said it very clearly. Are you saying that
if it, you already agreed that an
unfavourable evaluation you understood
to mean …
DEFENDANT: Contract would not be renewing.
HIS LORDSHIP: I think court was asking having
understood that in relation to evaluation
period at the end of the first contract,
did you understand it as well to be so in
relation to second contract. Is that
what you are asking, Mr. Mannings?
DEFENDANT: That is where I was going.
HIS LORDSHIP: Going? I thought you had reached. I
anticipated for you.
DEFENDANT: Very well, in relation to first, that you
understood that an unfavourable
evaluation would mean no new contract
and you said yes, you understood that
the first period that is no different from
the second period?
A Yes.
HIS LORDSHIP: I will have to check my record but I am
sure you had asked that.
DEFENDANT: You don’t have to check your record my
junior says yes?
HIS LORDSHIP: I would hate to think I was advocating
on your behalf.
DEFENDANT: No, m’Lord, it is just a very good
question to ask. Okay Mr. Hamilton, I
am going to see if I can go to another
area quickly. Your claim – well let me
go to some of the issues that arose in
the process of evaluation. You know
Olivier Grant-Williams, you know her?
A Yes, I know her.
Q Yes. Who did you understand her to
be in relation to the defendant’s
company?
A She is a manager for one of the
departments that we work on the
generator.
Q She is a manager for the department?
A That we carried out maintenance of
generator.
Q And when Mrs Williams says that she
met with you several times to express
certain dissatisfaction that would be
true?
A No, not all true.
HIS LORDSHIP: Counsel that’s not yet evidence in this
case.
DEFENDANT: Guided, m’Lord.
Q Would it be true to say that Mrs
Williams met with you and other
representatives from your organization
from you company on a number of
occasions to express Digicel’s
dissatisfaction with the services being
provided?
A We met twice on occasion.
Q When you said we met?
My company and the staff of the Digicel
in meeting.
Q You say met twice in the second
contract actually?
A Yes, once was an evaluation was carried
out and when they have a dispute with
the battery charger.
Q Once was when you had a meeting
dispute with a battery charger or over
charging, the battery charger.
Q You were having dispute with …
HIS LORDSHIP: Just a moment.
DEFENDANT: Just a moment
HIS LORDSHIP: Yes.
Q And am I correct to say that on those
two meetings that you speak about,
were meetings to complain about
performance and service of Thomas-
Hamilton and Associate Limit?
A No, they were argument about price of
the battery charger.
Q Well, if that talking …
A We were having dispute about …
Q Were they happy with the price, sir?
A No, I don’t think so.
Q Okay. The meeting, the evaluation
meeting you are talking about was the
meeting of February 16, 2006?
A I think that the evaluation meeting was,
I can’t recall.”
Was the contract wrongfully terminated?
The appellant’s submissions
[50] Mr Bishop contended that the appellant’s contract was wrongfully terminated. He
complained that in dealing with that issue, the learned judge failed to consider:
a. the principle of holding over for several months under the
same terms and conditions of the previous contract;
b. the appellant’s case was strengthened by the respondent
purchasing all the spare parts;
c. the appellant and the respondent under the contract were
responsible for refueling the respondent’s generators in
several locations;
d. the appellant employed additional staff and kept them in
position to respond to emergency requirement;
e. evidence of loss of the appellant’s income;
f. the failure to provide the appellant with any warning letter nor
was the evaluation report discussed with the appellant;
Counsel also argued that the learned judge should have had serious concerns about the
evaluation process and the termination letter which gave the appellant two day’s notice.
The respondent’s submission
[51] The respondent however stridently submitted that the contract came to an end
on the 31 March 2006 by the effluxion of time. He contended that the appellant is not
entitled to the reliefs or sums claimed. It was his submission that any
obligation/expense incurred by the appellant was incurred in furtherance of its
obligations under the contract period ending 31 March 2006 and or performance on an
interim basis for which the appellant has been compensated.
[52] Any obligation/expense which was undertaken for a period greater than one
month was therefore undertaken at its own risk with the knowledge that the award of a
new contract for a new contractual period was not guaranteed. Mr Manning cited the
following authorities in support of his contentions: Pennock v United Farmers of
Alberta Co-operative Limited 2008 ABCA 278; Ex Parte Reprotech [2002] UKHL8;
and Teo Siew Peng and Another v Neo Hock Peng and Others [1998] SLR 472
and Volume 9, Halsbury’s Laws of England, 4
th
Edition.
Was the contract breached?
The law
[53] The learned author of Halsbury’s Laws of England, 4
th
Edition, Volume 9, at
paragraph 529 defined contracts for a fixed term thus:
“Where the parties to a contract stipulate that the contract is
to continue for a definite period, the contract cannot be
terminated before the expiration of that period, unless the
parties are empowered so to do by the terms of the
contract, or agree to abandon it; and if the duration of a
contract for a fixed term is conditional on the approval of
one of the parties, the contract can only be terminated
within that period provided the disapproval of the party was
genuine and not capricious.
Where the contract provides that it is to continue for a fixed
term and thereafter until determined by notice, the contract
cannot be terminated before the specified period expires,
but it is a matter of construction of the words used in the
contract whether the contract is one that can be terminated
at the end of the period by a notice given during that period,
or is one which can only be determined after the expiry of
the definite term by notice given after the end of the term.”
[54] It is not disputed that the second contract had come to an end in March 2006.
The language of the contract between the parties was unequivocal. Under the heading,
“Termination of Agreement”, the contract stated:
“Failure to comply with any condition set forth in this
agreement will result in a written warning and if repeated,
termination of this agreement. This agreement takes effect
on the date of signing of this document by all parties and is
valid for one year from the date of signing. It may be
terminated by either party on the basis of two (2) months
notice in writing to that effect.”
[55] The assertion that the appellant was entitled to two months’ notice is therefore
untenable in light of the explicit language of the agreement. At the expiration of one
year, the contract would have terminated by effluxion of time. There was therefore no
need for notice to be given. Either party could, however, have terminated the contract
before its expiration in March 2006 by the giving of two months’ notice.
[56] As noted, and as has been accepted by the appellant, its renewal was dependent
on its evaluation report. No evidence of the necessary cogency has been advanced to
demonstrate that the appellant could reasonably have expected that a new contract
was likely. The appellant also failed to satisfy the court that he was led to that belief by
an agent of the respondent who was authorised to do so.
[57] On the evidence, the contractual arrangements, after the termination of the
contract on 31 March 2006, which the learned judge accepted, was that the appellant
held over on a month to month basis. If the appellant, on the evidence, had a
reasonable expectation, that a new contract would have been awarded, and the
circumstances were such that it would have been unconscionable for the respondent to
resile from its representations to that effect, the relevant concept would have been
estoppel. Estoppel was however not pleaded.
[58] It was formerly held to be settled law that estoppel had to be specifically
pleaded. In Morrison Rose and Partners v Hillman (1958 M No 2930) [1961] 2 QB
266, Holroyd Pearce L.J. said estoppel:
“is not merely evidence. It is well settled that it must be
pleaded as an allegation, though evidence may thereafter be
given in support of the plea.” (page 270)
See also Saunders (Executrix of the estate of Rose Maud Gallie (deceased) v
Anglia Building Society (formerly North Hampton and County Building
Society) [1970] 3 All ER 961.
[59] The learned authors of Bullen & Leake & Jacobs Precedents of Pleadings, 13
th
edition, were of like view. Page 1148 of the text reads:
“Every estoppel must be specifically pleaded, not only
because it is a material fact, but also because it raises
matters which might take the opposite side by surprise, and
usually raises issues of fact not arising out of the preceding
pleadings….It is not, however, necessary to plead estoppel
in any special form so long as the matter constituting the
estoppel is stated in such a manner as to show that the
party pleading relies upon it as a defence or answer
(Houstoun v Sligo (1885) 27 Ch D 448; and see Sanders
(orse Saunders) v Sanders (orse Saunders) (1952) 2
All ER 767, p 769, per Lord Merriam P.). On the other hand,
where a party omits to plead the defence of estoppel, when
he has the opportunity of doing so, he cannot thereafter rely
on it (Matthew Osbourne (1853) 13 CB 919 and see
Trevivian v Lawrence (1704) 2 Smith LC 13 ed 655.”
[60] Since the advent of the CPR and the resultant new regime, what is of importance
now, is that the general nature of the claim must be made clear from the pleadings.
Rule 8.7(1)(a) of the CPR requires a claim form to “include a short description of the
nature of the claim”.
[61] ‘Legitimate expectation’, was pleaded. It is undeniable that by the appellant’s
pleadings, the respondent was aware of the appellant’s contention that it was led to
believe that its contract would have been extended for another year, and acting on that
promise, it operated to its detriment. The appellant was nevertheless required to
delineate the parameters of the case which the respondent had to answer. Legitimate
expectation, albeit somewhat analogous to estoppel, is a different concept as was made
plain by Lord Hoffmann in Ex Parte Reprotech.
[62] Lord Hoffmann’s statement that “public law has already absorbed whatever is
useful from the moral values which underlie the private law concept of estoppel” is
supportive of Mr Bishop’s argument that the evidence in support of a claim for estoppel
would not differ from that which would be required to support a claim of legitimate
expectation. It is however of significance that the first and only mention of ‘estoppel’
was by the learned judge during the submissions. Page 51 of the further supplemental
record of appeal reads thus:
“Even if you started off as estoppel, certain difficulties in
order to establish dependency on estoppel [sic].”
[63] The respondent was entitled to know, at the latest, during the trial, exactly what
he was confronting. If the appellant intended to rely on estoppel it ought to have
amended its pleadings to include that claim. There was however, no application by the
applicant to amend its pleadings to include estoppel.
[64] In McPhilemy v Times Newspapers Ltd, [1999] 3 All ER 775, at page 792-
793 of the decision Lord Woolf enunciated:
“The need for extensive pleadings including particulars
should be reduced by the requirement that witness
statements are now exchanged. In the majority of
proceedings identification of the documents upon which a
party relies, together with copies of the party’s witness
statements will make the detail of the nature of the case the
other side has to meet obvious. This reduces the need for
particulars in order to avoid being taken by surprise. This
does not mean that pleadings are now superfluous.
Pleadings are still required to mark out the
parameters of the case that is being advanced by
each party. In particular they are still critical to identify the
issues and the extent of the dispute between the parties.
What is important is that the pleadings should make clear
the general nature of the case of the pleader.” (Emphasis
supplied)
[65] In any event, on the appellant’s evidence, a plea of estoppel would not succeed
as it was aware that it would be highly unlikely that its contract would have been
renewed. In the circumstances, I agree with Mr Manning that any obligation which was
undertaken by the appellant beyond 1 June 2006 would have been undertaken at its
peril, the appellant having been notified that by way of letter dated 29 May 2006, that
the contractual arrangements would terminate on 1 June 2006. Indeed for the
appellant to have incurred expenses for another year would have been foolhardy. The
appellant is therefore only entitled to expenses it reasonably incurred for the period
between the 31 March 2006 and 1 June 2006 for which it has been compensated.
[66] In light of the foregoing, I would dismiss the appeal with costs to the respondent
to be agreed or taxed.
F WILLIAMS JA (AG)
[67] I too have read in draft the judgment of my sister Sinclair-Haynes JA and agree
with her reasoning and conclusion. I have nothing to add.
PHILLIPS JA
ORDER
Appeal dismissed. Costs to the respondent to be agreed or taxed.