the republic of trinidad and tobago in the high...

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THE REPUBLIC OF TRINIDAD AND TOBAGO

IN THE HIGH COURT OF JUSTICE

CLAIM NO. CV 2012 - 2508

Between

BUILDING CONCEPTS & CONSTRUCTION LTD.

Claimant

And

THE TRINIDAD AND TOBAGO HOUSING DEVELOPMENT CORPORATION

Defendant

BEFORE THE HONOURABLE MR. JUSTICE A. DES VIGNES

Appearances:

Mr. Rishi P. A. Dass instructed by Ms. Faikah Carrmuddeen for the Claimant

Mrs. Deborah Peake, SC and Mr. Ravi Heffes-Doon instructed by Mr. Andre Rudder for the

Defendant

JUDGMENT

INTRODUCTION

1. On 8th September 2005 the Claimant and the Defendant entered into a Joint Venture

Agreement, (hereinafter referred to as “the Contract”) whereby the Claimant was required to

carry out certain works consisting of the design, financing and construction of 162 housing

units known as “Peastree Development” in Tunapuna, Trinidad.

2. The Claimant’s claim against the Defendant is for the sum of $15,345.652.75 as damages for

breach of the Contract. This amount comprises (a) $8,627,004.82 for fluctuations, being the

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increased costs of materials and related items resulting from inflation; (b) $470,717.16 for

project management services being 1.5% of the final contract sum of $49,902,885 less the sum

of $277,826.11 paid on account; (c) $2,505,214.40 for increased preliminaries for 18 months

by reference to the contract rate/sum for preliminaries; and $3,742.716.37 for overheads

calculated in accordance with the Hudson formula for 18 months delay being 7.5% of the

contract sum. Alternatively, the Claimant claims the amount of $470,717.16 for project

management services on a quantum meruit basis. The Claimant also claims interest at the rate

of 6% per annum from the date of the claim to the date of judgment and costs.

3. The Defendant denies liability for the amounts claimed by the Claimant on the following

grounds:

i. The claim for fluctuations was made after the expiry of four (4) years from the date on

which the cause of action accrued and was barred by the Limitation of Certain

Actions Act, Chapter 7:09;

ii. The Contract provided that the Project Manager was required to act on behalf of the

Defendant in all matters regarding the administration of the Contract, determine the

value of work executed by the Claimant and give instructions to the Claimant under the

Contract. There was no agreement, oral or otherwise, with the Defendant to vary the

Contract to make provision for the Claimant to provide such services on behalf of the

Defendant. Further, the Claimant did not provide any project management services for

the Defendant and/or the Defendant did not receive the benefit of same and the

inclusion of the item “Project Management Fee” in the Final Account relates to the cost

of services that the Claimant undertook in the internal management of its operations.

Therefore, the Claimant is not entitled to any quantum meruit for works that were not

done and were not undertaken at the Defendant’s request. In any event, any claim for

project management services is statute barred; and

iii. The Claimant’s representatives met with the Quantity Surveyor appointed by the

Defendant and agreed a Final Account which was duly signed by the Claimant’s

Managing Director on behalf of the Claimant on 9th October 2008. As a consequence,

the Defendant is not liable to pay for increased preliminaries or overheads.

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4. The Defendant also counterclaims against the Claimant for the repayment of $8,500,000.00

paid by the Defendant to the Claimant on 28th August 2013 (hereinafter referred to as “$8.5M”)

pursuant to an agreement made between the parties on 27th August 2013 (hereinafter referred

to as “the Agreement”) on the grounds that the Claimant, in breach of the fundamental term

and/or implied term and/or condition of the Agreement, re-registered a judgment against the

Defendant on 19th December, 2013. Further or alternatively, the Claimant’s re-registration of

the Judgment and/or refusal to proceed to arbitration amounted to a repudiation or renunciation

of the Agreement. Accordingly, the consideration for the $8.5M wholly failed and/or the

Claimant has been unjustly enriched at the expense of the Defendant and the Claimant is liable

to repay the $8.5M to the Defendant. Further or alternatively, the Defendant will seek to set

off its Counterclaim in extinction or diminution of the Claimant’s claim.

PROCEDURAL HISTORY

5. On 22nd June, 2012, the Claimant instituted proceedings against the Defendant claiming

$31,019,322.50 as damages for breach of the Contract, restitution and quantum meruit. The

Claimant also claimed interest and costs.

6. On 27th September 2012, the Defendant’s Attorney-at-Law, Mr. Gerald Ramdeen entered an

appearance.

7. On 17th October 2012, the Claimant filed an Amended Claim Form and Amended Statement

of Case which, inter alia, reduced its claim to $15,345,652.75 together with interest and costs.

8. On 24th January 2013, by consent of the parties, this Court extended the time for the Defendant

to file its Defence to 25th January, 2013. However, the Defendant failed to file a Defence by

25th January, 2013.

9. By electronic mail dated 28th May, 2013 the Claimant’s Attorney-at-law, Mr. Garvin Simonette

wrote to Mr. Ramdeen and attached for his approval the following drafts: (i) letter from Mr.

Ramdeen to Mr. Simonette regarding a stay of the proceedings and the appointment of Mr.

Adrian Byrne as an Arbitrator; (ii) Notice of Application to stay the proceedings; (iii) a draft

Order; and (iv) agreement for the appointment of an Arbitrator.

10. On 9th July, 2013, the Claimant entered judgment against the Defendant in default of Defence

for $16,315,067.06 together with interest and costs (hereinafter referred to as “the Judgment”).

On 23rd July 2013 the Claimant registered the Judgment at the office of the Registrar General.

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11. On 21st August, 2013, the Defendant applied to set aside the Judgment.

12. By letter dated 27th August 2013, Attorney-at-Law for the Claimant, Sophia Vailloo wrote to

Mr. Ramdeen, confirming the following terms upon which the Claimant would release the

Judgment at the office of the Registrar General:

i. The Defendant would pay to the Claimant the $8.5M on or before 30th August 2013

by cheque to “Ignatius Chambers”;

ii. The $8.5M represented “a non-refundable part payment towards damages” due to the

Claimant as set out in the Amended Claim Form and Statement of Case;

iii. On receipt of the Defendant’s cheque for the $8.5M, the Claimant’s Attorney-at-Law

would immediately file a Notice to release the Judgment at the Registrar General’s

Department;

iv. The Defendant would file a Notice of withdrawal of its Application to set aside the

Judgment filed on 21st August 2013 simultaneously with the Claimant’s filing of a

Notice to release the Judgment;

v. The parties agreed that “the balance of the claim” would go to arbitration pursuant to

terms of engagement as set out in Mr. Simonette’s email dated 28th May, 2013. The

parties would finalise an arbitration agreement, appointment of an Arbitrator together

with Terms of Reference and directions on or before 15th September 2013 for an

arbitration hearing in early December 2013;

vi. The $8.5M was applicable to principal damages only with interest to be calculated by

the Arbitrator; and

vii. The Claimant irrevocably undertook to refrain from enforcement of the Judgment

between the date of the letter and formal finalisation of the arbitration documents.

13. Mr. Ramdeen “irrevocably agreed” to the terms of the letter on behalf of the Defendant by

affixing his signature to a copy of the letter.

14. On 28th August 2013, the Defendant paid the Claimant $8.5M and withdrew its Application

to set aside the Judgment.

15. On 28th August 2013, the Claimant released the Judgment registered on 23rd July 2013.

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16. The parties were in regular written communication by electronic mail concerning the proposed

arbitration between 16th September 2013 and 11th November 2013, without finalizing the

arbitration agreement, appointment of an Arbitrator together with Terms of Reference and

directions (hereinafter referred to as “the Arbitration Documentation”). However, on 19th

December 2013, Ms. Vailloo re-registered a judgment for $8,083,259.94 together with interest

at the rate of 12% per annum from 28th August 2013 to the date of payment. The Minute of

Final Judgement stated that “on the 28th August, 2013 the judgment was partially satisfied in

the sum of $8,500,00.00 and the Claimant filed a request to release the judgment on 28th

August, 2013”. On 9th January 2014, Mr. Simonette notified Mr. Ramdeen of such re-

registration. On 5th March 2014, Ms. Vailloo re-registered a judgment for the sum of

$16,315.067.06 together with interest at the rate of 12% per annum from 9th July 2013 to the

date of payment.

17. On 28th May 2014, this Court set aside the Judgment and gave directions, inter alia, for the

filing and exchange of witness statements and for this matter to proceed to trial.

ISSUES

18. The following issues arise for determination in this matter:

i. Whether the Claimant is entitled to succeed in its claims against the Defendant for:

a. Fluctuations in the price of materials and related items;

b. The provision of project management services;

c. Increased preliminaries; and

d. Overheads.

ii. Whether the Defendant is entitled to the repayment of the $8.5M paid to the Claimant

on the grounds that:

a. The Claimant breached the Agreement by reason of:

(i) The Claimant’s re-registration of the judgment on 19th December, 2013

amounted to a breach of a fundamental term and/or implied term and/or

condition of the Agreement;

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(ii) The Claimant’s re-registration of the judgment on 19th December, 2013

and/or the Claimant’s refusal to proceed to arbitration amounted to a

substantial or serious failure to perform the Agreement and/or deprived the

Defendant of substantially the whole benefit which it was intended that it

should obtain under the Agreement;

(iii)The Claimant’s re-registration of the judgment on 19th December, 2013

and/or the Claimant’s refusal to proceed to arbitration amounted to a

repudiation or renunciation of the Agreement;

b. The consideration for the payment of the said $8.5M wholly failed and/or the

Claimant has been unjustly enriched at the expense of the Defendant?

DISPOSITION

19. I am of the opinion that the Claimant is not entitled to succeed in its claims for:

i. Fluctuations in the price of materials and related items on the ground that this claim is

barred by the Limitation of Certain Actions Act, Chapter 7:09;

ii. Project management services on the grounds that:

a. By the terms of the Contract, the Claimant being the Contractor on the project was

not entitled to claim for the provision of project management services;

b. Further, the Claimant failed to prove that there was any agreement between the

parties for the provision of project management services to the Defendant by the

Claimant; and

c. Further, the Claimant failed to prove that it provided any such services to the

Defendant.

iii. Increased preliminaries and overheads on the grounds that:

a. The Final Account signed by the Claimant’s Managing Director and the payment

by the Defendant to the Claimant of the amount due thereunder debars the Claimant

from maintaining these claims; and

b. The Claimant failed to lead evidence to support either of these claims.

20. In respect of the Counterclaim for the refund of the $8.5M, I am of the opinion that:

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i. The Defendant is entitled to an award of nominal damages of $5,000.00 for the

Claimant’s breach of the Agreement; and

ii. The Defendant is not entitled to succeed in its claim for the repayment of the $8.5M

based on the unjust enrichment of the Claimant.

Issue 1(a): The Claimant is not entitled to succeed in its claim against the Defendant for

fluctuations in the price of materials and related items

21. At the commencement of the trial, Counsel for the Defendant, Mrs. Peake, SC submitted, as a

preliminary point, that the Claimant’s claim in respect of fluctuations should be struck out as

the same was barred by Section 3(1)(a) of the Limitation of Certain Actions Act, Chapter

7:09. She pointed out that the Claimant’s cause of action arose on 26th March, 2008, which

was the date of the invoice submitted by the Claimant to the Defendant. 1 However, the

Claimant instituted this action on 22nd June, 2012 which is more than four (4) years after the

accrual of the cause of action.

22. In response, Counsel for the Claimant, Mr. Dass submitted that the liability did not arise from

date of the invoice since, in a fluctuations claim, adjudication was first required to determine

the amount that the Claimant was entitled to.

23. I disagreed with Mr. Dass’ submissions and upheld the submissions of Mrs. Peake, SC and

struck out the Claimant’s claim for fluctuations. I did so on the grounds that, upon my review

of the pleadings and the evidence, it was clear that this claim was based on the allegation that

the Defendant had failed and/or refused and/or neglected to pay the Claimant’s invoice dated

26th March 2008. Therefore, the cause of action arose on 26th March 2008. Since this claim

was filed more than four (4) years after that date and the Claimant has not pleaded any facts in

its Reply or given any evidence to bring itself outside the provisions of the Limitation Act, this

claim was bound to fail. Accordingly, I struck out the Claimant’s claim for fluctuations.

Issue 1(b): The Claimant is not entitled to succeed in its claim against the Defendant for

project management services

24. I am of the opinion that the Defendant is not liable to the Claimant for the cost of project

management services for the following reasons:

1 Paragraph 21 of the Re-Amended Statement of Case and paragraph 8 of the Witness Statement of Mark Gransaull

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i. Based on the evidence before me, the functions that Mr. Gransaull seeks to rely on as

being provided by the Claimant in the capacity of Project Manager for the Defendant

are in fact contractual functions of the Claimant in its capacity as Contractor.2 Further,

I am not persuaded that the functions of the Project Manager under the Contract could

be undertaken by the Claimant as Contractor since the Claimant could not have

managed and instructed himself on behalf of the Defendant as employer. 3 The

unchallenged evidence of the Witnesses for the Defendant, namely, Mr. Tiwary, Mr.

Garcia and Ms. Chow, all attest to the fact that it would be a conflict of interest for a

Contractor employed on a project to perform project management services on behalf of

the employer. Further, under cross-examination, Mr. Gransaull conceded that the

functions of the Project Manager as set out in the Contract were not functions that the

Claimant, as Contractor/Developer, could perform as Project Manager on behalf of the

Defendant;

ii. Mr. Gransaull gave contradictory evidence with regard to an oral agreement with Mr.

Garcia on behalf of the Defendant to provide project management services for the

Defendant. In the Re-Amended Statement of Case, the Claimant alleged that there was

an oral agreement made between Mr. Garcia and Mr. Gransaull for the provision of

these services. However, in his Witness Statement, Mr. Gransaull stated that Mr. Garcia

and Mr. Edgar Williams on behalf of the Defendant requested him to provide project

management services and Mr. Garcia promised to provide the Claimant with a letter in

confirmation of that request but he failed to do so. Under cross-examination, Mr.

Gransaull stated that the request made of him was equivalent to an oral agreement.

Further, when questioned about the Claimant’s letter to the Defendant dated 13th July,

2006 which the Claimant alleged set out the agreed rate for the project management

services, Mr. Gransaull accepted that this letter did not refer to any request by Mr.

Garcia or Mr. Williams or any agreement for the Claimant to provide project

management services.

Mr. Garcia was unshaken in his evidence that he never asked the Claimant to undertake

project management duties on behalf of the Defendant.

2 See Statutory Requirements, Brief/Employer’s Requirements dated September 2004, Appendix 2 of the Contract 3 See Articles 2.1, 3.1, 6.2 – 6.6, 6.13, 8.1-8.3, 9.2, 10.2.2, 11.4, and 11.9 of the Contract

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Based on this evidence, I do not accept that there was any oral agreement between the

Defendant and the Claimant for the Claimant to provide project management services

to the Defendant;

iii. The Claimant has failed to adduce any proof that it provided project management

services to the Defendant. In the Re-Amended Statement of Case, the Claimant alleged

that Project Control Associates Limited and QS Services provided the critical functions

of project coordination, superintendence and supervision of the Project and after the

Defendant terminated their services, the Claimant was left to provide these project

management services. In his Witness Statement, Mr. Gransaull asserted that the

Claimant performed these services at 1.5% of the then approved contract sum of

$49,902,885.00. However, as earlier stated, the functions performed by the Claimant

were contractual functions of the Claimant in its capacity as Contractor and the

functions of the Project Manager under the Contract could not be undertaken by the

Claimant as Contractor since the Claimant could not have managed and instructed itself

on behalf of the Defendant as employer.

Mr. Garcia gave evidence that after the termination of the services of QS Services, the

Defendant carried out the project management services in-house and that as far as he

was aware, the Claimant did not undertake any project management duties nor did he

ask the Claimant to do so. Mr. Garcia was not shaken on this evidence in cross-

examination.

Further, I do not accept the submissions of Mr. Dass that the Claimant’s claim is

substantiated by virtue of Mr. Tiwary’s evidence under cross-examination that the

payment for project management in the Final Account was previously approved by the

Defendant or by Mr. Garcia’s evidence that a payment was in fact made. In my opinion,

the inclusion of the entry in the Final Account for project management fees does not

prove that the Claimant actually provided project management services to the

Defendant to the value of the amount claimed by the Claimant in this action. The

Claimant bore the burden of proving that it provided such services to the Defendant in

accordance with the terms of either the Contract or at the request of the Defendant but

it has failed to discharge that burden.

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I also do not accept Ms. Dass’ submission that if the Court does not find that there was

an oral agreement, the Claimant ought to be awarded quantum meruit at a rate of 1.5%

since the Claimant failed to adduce evidence that it provided project management

services to the Defendant.

Issue 1(c): The Claimant is not entitled to succeed in its claim against the Defendant for

increased preliminaries

25. Having considered the evidence adduced in respect of this issue, I am of the opinion that the

Defendant is not liable to pay the Claimant for loss and damage suffered in respect of increased

preliminaries for the following reasons:

i. I agree with the submissions of Mrs. Peake, SC that the Final Account in the sum of

$47,728,910.33 constituted a mutually agreed assessment of the final value of the

works performed by the Claimant on the Peastree Housing Development. This Final

Account was prepared by Mr. Tiwary, the Quantity Surveyor appointed by the

Defendant, after extensive negotiations and joint site visits with the Claimant’s

representative, Mr. Superville. In his evidence,5 Mr. Tiwary described the process by

which a Final Account is completed, outlining that a contractor would submit its claims

for works done and any variations and these would be evaluated before the Final

Account was prepared. In the event of any disagreement with the Final Account, either

party could request a re-evaluation or the process may be terminated or suspended so

that the parties could revert to dispute settlement pursuant to the contract. Where the

parties agreed with the Final Account, it was signed off and the Contractor was paid

the stated sum. Mr. Tiwary indicated that “all the Claimant’s claims were fully

discussed, evaluated, assessed, and taken account of.”

Mr. Tiwary’s unchallenged evidence was that the Claimant claimed to be entitled to

payment for additional preliminaries based on the extended time spent on the project

which resulted in it incurring additional expenses and the Claimant wanted the Final

Account to reflect this. Therein, sums were agreed upon by the parties and subsequently

paid by the Defendant to the Claimant in respect of increased preliminaries. Mr. Tiwary

stated that $25,000 per month was initially arrived at and the Claimant made an

5 Witness Statement of Mr. Tiwary at paras. 12-14, 27-28.

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additional claim for $15,000 per month which was agreed to and signed off by both

parties. Accordingly, the Claimant was paid $720,000 in increased preliminaries and

has no basis for an additional claim under this heading; and

ii. By way of its Re-Amended Statement of Case, the Claimant claimed increased

preliminaries for 18 months by reference to the contract rate/sum for preliminaries.

This amounted to $2,505,214.40, which was the exact sum outlined in the Claimant’s

cost summary which was attached to its Letter of Acceptance for the project. In his

witness statement, Mr. Gransaull provided some explanation for the claim by stating,

for the first time, that during the 18 month period of delay full preliminaries were

maintained on the project site, including, inter alia, site supervision, security,

scaffolding. He also stated that the sum was calculated by multiplying the preliminaries

from the Bills of Quantities by the delay period.

In answer to questions from the Court in respect of how the figure claimed was arrived

at, Mr. Gransaull stated that it was a percentage, specifically 1% of the final contract

amount and was similar to the Hudson formula. He later resiled from that answer and

stated that he did not know how the amount was arrived at and it was arrived at on the

advice of Counsel. He also indicated to the Court that he did not think that the

percentage value would be in the Contract but that he could be mistaken. When the cost

summary was brought to his attention, he then stated that the Claimant was claiming

the exact amount as stated in the cost summary for the 18 month period and the figure

paid in the Final Account was to be deducted therefrom.

Mr. Gransaull failed to adduce any evidence of the actual monies expended by the

Claimant in respect of increased preliminaries and he was unable to justify the

Claimant’s claim under this head. On the other hand, Mr. Tiwary gave helpful evidence

under cross-examination on this aspect of the claim. He stated that the sum outlined in

the Contract for preliminaries was not automatically payable for the extended period

where delays occurred. His evidence was that although 18 months was accepted as the

delay period, this did not mean that the preliminaries ought to have been maintained at

the contract value in the Cost Summary. He also stated that the contractor was entitled

to claim what its actual expenditure would have been during the extended period. He

accepted that in the Final Account, the Claimant would have been allocated a meagre

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amount under this head, but the Claimant would not have incurred substantial running

costs for the 18 month delay period. He indicated that this was discussed with the

Claimant’s representative, Mr. Superville and they made allowances for the services

provided on site at the expense of the Claimant based on the personnel on site. In

answer to questions from the Court, Mr. Tiwary stated that the Claimant would have to

produce bills to support its expenditure, which it did not do. However, he

acknowledged that the Claimant had security, a site foreman and Mr. Superville who

was the Claimant’s Project Manager and on this basis an agreed figure was arrived at.

Mr. Dass relied on Keating on Construction Contracts at pp. 294-295 to support his

submission that claims for increased preliminaries are frequently made and, for

convenience allowed upon a calculation which uses bills proportioned to the length of

the delay compared with the original contract period. However, Keating (supra) also

states that, for a claim under a contract, such a calculation must be justified under the

terms of the contract and that “the basis for calculation is often excessively theoretical,

ignoring the principle that damages are to compensate for actual loss and must be

proved….For damages, the calculation should be of the actual additional costs…. His

actual additional costs ought to be known, recorded and capable of being proved.”6

Issue 1(d): The Claimant is not entitled to succeed in its claim against the Defendant for

overheads

26. Having considered the evidence adduced in respect of this issue, I am of the opinion that the

Defendant is not liable to pay the Claimant for overheads for the following reasons:

i. As earlier stated at paragraph 25(i) herein, I agree with the submissions of the

Defendant that the Final Account constituted a mutually agreed assessment of the final

value of the works performed on the project and that the Defendant made a final

payment of $5,029,194.97 in settlement of the outstanding sums due to the Claimant

on the basis of the Agreed Final Account. Accordingly, the Claimant has no basis for

an additional claim under this heading; and

ii. In any event, the Claimant has failed to prove its claim for overheads. In its Re-

Amended Statement of Case, the Claimant alleged that its claim for overheads was

6 Paragraphs 8-049 and 8-050

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calculated in accordance with the Hudson formula for the 18 month delay at 7.5% of

the contract sum. However, Mr. Gransaull failed to give any evidence to explain what

was the meaning and relevance of the Hudson Formula or how 7.5% was arrived at.

Under cross examination, Mr. Gransaull stated that he was not a Quantity Surveyor and

took advice from people and on that basis he could not explain what the Hudson

Formula was to the Court. When questioned as to basis of the claim for $3.7 million

for overheads, Mr. Gransaull stated that it related to overheads, security on site and

scaffolding. He later admitted that some of what he stated would be included under

preliminaries but maintained that the calculation was based on the Hudson Formula

which his former Counsel was very familiar with and was easily obtainable. In my

view, this is not an acceptable basis upon which this claim can be proved.

Issue 2(a): The Defendant is not entitled to the repayment of the $8.5M paid to the Claimant

on basis of the Defendant’s breach of the Agreement but is entitled to nominal

damages.

Issue 2(b): The Defendant is not entitled to the repayment of the $8.5M paid to the Claimant

on basis of unjust enrichment.

27. In its Counterclaim the Defendant alleged that it was a term and/or a fundamental term and/or

implied condition of the Agreement that once the Defendant paid over the $8.5M to the

Claimant and withdrew the Notice of Application to set aside the Judgment, the Claimant

would not re-register the Judgment against the Defendant and that the matter would proceed

to arbitration. In accordance with the Agreement, on 28th August, 2013, the Defendant paid to

the Claimant the $8.5M and withdrew its Application to set aside the Judgment and the

Claimant filed a Notice to release the Judgment. Further, the Defendant alleged that

subsequent to 15th September, 2013, the parties were in communication via electronic mail

with a view to finalizing the Arbitration Documentation and proceeding to arbitration. It

contends that by November, 2013 the parties had agreed on the location of the arbitration, the

Arbitrator and his fee and a draft arbitration agreement had been circulated between the

parties. However, on 19th December, 2013 the Claimant re-registered the Judgment without

notice to the Defendant.

28. The Defendant alleged that:

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i. The re-registration of the Judgment was in breach of the term and/or fundamental term

and/or implied term and/or condition of the Agreement;

ii. The re-registration of the Judgment and/or the refusal to proceed to arbitration

amounted to a substantial or serious failure to perform the Agreement and/or deprived

the Defendant of substantially the whole benefit which it was intended that it should

obtain under the said Agreement;

iii. The re-registration of the Judgment and/or refusal to proceed to arbitration amounted

to a repudiation or renunciation of the Agreement and consequently the Claimant was

obliged to return the $8.5M to the Defendant;

iv. The payment the $8.5M which was expressed to be a “non-refundable part payment”

in the Agreement was on the basis of or subject to the condition that the Claimant

perform its contractual obligation to release the Judgment and not re-register it once

the monies were paid and proceed to arbitration; and

v. The consideration for the payment of the $8.5M has wholly failed and/or the Claimant

has been unjustly enriched at the expense of the Defendant and is liable to repay the

said amount.

29. Therefore, the Defendant counterclaimed against the Claimant for an Order that the Claimant

repay the $8.5M to the Defendant or alternatively damages for breach of the Agreement.

30. In its Defence to the Counterclaim, the Claimant responded that:

i. The Claimant unequivocally undertook to refrain from enforcement of the Judgment

only until the formal finalization of the Arbitration Documentation on or before 15th

September, 2013;

ii. There was no term and/or condition of the Agreement, implied or otherwise, in respect

of a later registration of the Judgment and/or of enforcement of the Judgement after

15th September, 2013. Therefore, the Claimant was entitled to re-register the Judgment

after 15th September, 2013;

iii. The payment the $8.5M was agreed to be and was a non-refundable part payment which

the Claimant properly retained and which remains the property of the Claimant;

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iv. The Claimant did not acquiesce with respect to non-compliance with the agreed date

of 15th September, 2013 and Mr. Simonette made concerted efforts to contact Mr.

Ramdeen by telephone on at least 8 occasions in or around the beginning of September,

2013 but his calls were unreturned. Further, a meeting was scheduled to take place at

the office of Mr. Ramdeen but, on Mr. Simonette’s arrival, Mr. Ramdeen was not there;

v. Consideration for the payment the $8.5M has not wholly failed in that the Defendant

obtained the benefit of performance as agreed until 15th September, 2013. In any event,

the Defendant is not entitled to a repayment on the grounds of unjust enrichment since

the Defendant voluntary elected to pay the $8.5M on a non-refundable, irrevocable and

unconditional basis in respect of the admitted loss and expense caused by the Defendant

and suffered by the Claimant;

vi. The Defendant, by co-signing the Agreement, is estopped from denying that the $8.5M

was non-refundable; and

vii. Alternatively, the Claimant is entitled to retain the said sum in satisfaction of its claim

as set out in the Re-Amended Statement of Case.

Interpretation of the Agreement

31. The parties agree that the applicable principles for the construction of contractual agreements

has been recently restated in the decision of the United Kingdom Supreme Court in Rainy

Sky SA v Kookmin Bank.7 Therein Lord Clarke of Stone-cum-Ebony stated that:

“14 … the ultimate aim of interpreting a provision in a contract, especially a commercial

contract, is to determine what the parties meant by the language used, which involves

ascertaining what a reasonable person would have understood the parties to have meant.

As Lord Hoffmann made clear in the first of the principles he summarised in the Investors

Compensation Scheme case [1998] 1 WLR 896, 912 h, the relevant reasonable person is

one who has all the background knowledge which would reasonably have been available to

the parties in the situation in which they were at the time of the contract…

21 The language used by the parties will often have more than one potential meaning. I

would accept the submission made on behalf of the appellants that the exercise of

7 [2011] 1 WLR 290

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construction is essentially one unitary exercise in which the court must consider the

language used and ascertain what a reasonable person, that is a person who has all the

background knowledge which would reasonably have been available to the parties in the

situation in which they were at the time of the contract, would have understood the parties

to have meant. In doing so, the court must have regard to all the relevant surrounding

circumstances. If there are two possible constructions, the court is entitled to prefer the

construction which is consistent with business common sense and to reject the other…

23 Where the parties have used unambiguous language, the court must apply it…”

32. In Society of Lloyd’s v Robinson8 Lord Steyn stated:

“Loyalty to the text of a commercial contract, instrument, or document read in its

contextual setting is the paramount principle of interpretation. But in the process of

interpreting the meaning of the language of a commercial document the court ought

generally to favour a commercially sensible construction. The reason for this approach is

that a commercial construction is likely to give effect to the intention of the parties. Words

ought therefore to be interpreted in the way in which a reasonable commercial person would

construe them. And the reasonable commercial person can safely be assumed to be

unimpressed with technical interpretations and undue emphasis on niceties of language.”

33. As to the implication of any terms in an agreement, the authority of The Attorney General

of Belize v Belize Telecom Ltd. is instructive. Therein, the Judicial Committee of the Privy

Council took a broader approach to the implication of terms and held that the principles that

traditionally govern such, namely, where it is necessary to give business efficacy to the

contract and where the term implied represents the obvious, but unexpressed intention of the

parties, should no longer be regarded as “tests” to be surmounted but rather, as guidelines to

assist the court in answering the question of what the instrument means. As to the broader

approach Lord Hoffman stated as follows:9

“…in every case in which it is said that some provision ought to be implied in an

instrument, the question for the court is whether such provision would spell out in

8 [1999] WLR 756, 763 9 [2009] UKPC 10, [2009] 1 W.L.R. 1988 at paras. 21 and 28

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express words what the instrument read against the relevant background, would

reasonably be understood to mean…”

34. The circumstances that existed when the parties entered into the Agreement were that the

Claimant had obtained a Judgment against the Defendant on 9th July 2013 for $16,315,067.06

and had registered same on 23rd July 2013. The registration of the Judgment created a charge

over the real property of the Defendant encumbering same and preventing transactions in

which the Defendant was involved or wished to become involved from being completed. 10

On 21st August 2013, the Defendant had applied to set aside this Judgment and the hearing of

this Application was pending. The terms of the Contract provided that in the event of a dispute

which was not resolved within the negotiating period, the parties should submit the dispute to

non-binding mediation. In the event that the dispute was not resolved through mediation, the

dispute should be settled exclusively and finally by binding arbitration.11

35. In my opinion, a reasonable person, having all the background knowledge which was

reasonably available to the parties at the time of the Agreement, would have understood the

parties to have meant by the terms of the Agreement that:

i. The Defendant agreed to make a payment of $8.5M by the Defendant to the Claimant

in order to secure the release of the registration of the Judgment as a matter of extreme

urgency. This payment was to be applied as a part-payment towards the damages

claimed in CV 2012-2508 and the balance of the Claimant’s claim would be referred

to arbitration to determine whether or not the Claimant was entitled to the balance of

the claim as well as interest;

ii. The Claimant would not be obliged to refund this payment to the Defendant;

iii. Upon receipt of this payment, the Claimant would release the registration of the

Judgment and the Defendant would withdraw its Application to set aside the Judgment;

iv. The parties would agree upon and finalise the Arbitration Documentation on or before

15th September 2013 for an arbitration in early December, 2013;

v. The Claimant would refrain from enforcing the Judgment between 27th August, 2013

and the formal finalization of the Arbitration Documentation;

10 Section 5, Remedies of Creditors Act, Chap. 8:09 11 See Article 19 of the Contract

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vi. Once the matter proceeded to arbitration in early December 2013, as contemplated in

the Agreement, the Claimant would not re-register and enforce the Judgment until the

hearing and determination thereof. However, if as a consequence of the Defendant’s

default, the arbitration did not proceed in early December 2013, the Claimant would be

entitled to re-register and enforce the Judgment for the balance due and owing from the

Defendant, after giving credit for the payment of the $8.5M.

Undisputed Facts

36. The following facts are not in dispute:

i. On 28th August, 2013, the Defendant made the payment of $8.5M. On the same day, the

Claimant released the registration of the Judgment and the Defendant withdrew its

Application to set aside the Judgment;

ii. The Arbitration Documentation were not finalized by the parties by 15th September,

2013;

iii. The Attorneys-at-Law for the parties exchanged correspondence by electronic mail

relative to the terms of the Arbitration Documentation, the choice of venue and the costs

of the arbitration between 16th September 2013 and 11th November 2013;

iv. The arbitration did not proceed in early December 2013; and

v. The Claimant re-registered the Judgment on 19th December, 2013 for the amount of

$8,083,259.94 and notified the Defendant of such registration on 9th January 2014;

vi. The Claimant re-registered the Judgment on 5th March, 2014 for $16,315,067.06.

Time of the essence for finalizing Arbitration Documentation

37. Mrs. Peake, SC submitted that the Agreement was silent as to time being of the essence and

the surrounding circumstances did not imply that it was. Mr. Dass submitted that the time

provisions stated in the Agreement were to be strictly complied with.

38. Having regard to the fact that the Claimant had the benefit of the default judgment against the

Defendant for $16,315,067.06 and had agreed not to re-register or enforce the judgment on

the basis that the parties would proceed to arbitration for the balance of the Claimant’s claim,

I am of the opinion that, by necessary implication, time was of the essence with respect to the

finalization of the Arbitration Documentation on or before 15th September, 2013.

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39. Mrs. Peake also submitted that even if time was of the essence, the Claimant waived the

requirement to finalize the Arbitration Documentation by 15th September, 2013 and to proceed

to arbitration in early December, 2013 when it proposed new deadline dates as requested by

the Attorney-at-Law for the Defendant, Ms. Rachel Jaggernauth.

40. The evidence shows that there was no communication between the parties or their Attorneys-

at-Law with respect to this issue until 16th September, 2013 when Ms. Jaggernauth emailed

Ms. Vailloo requesting that new deadline dates be set. Thereafter, the parties continued to

exchange electronic mails regularly up to 11th November 2013, with a view to finalizing the

Arbitration Documentation as well as the costs of the Arbitrator and the identification of a

suitable venue and the costs thereof.

41. As earlier noted, the Claimant, in its Defence to Counterclaim, denied that there was any

acquiescence on its part with respect to non-compliance with the deadline of 15th September

2013 and alleged that its Attorneys-at-Law made concerted efforts to liaise with the

Defendant’s Attorneys via telephone in order to comply with that date. The Claimant alleged

that Mr. Simonette telephoned Mr. Ramdeen on at least 8 occasions and left messages but his

calls were not returned. Further, a meeting was scheduled to take place at the office of Mr.

Ramdeen but, when Mr. Simonette arrived there, Mr. Ramdeen was not there. However, the

Claimant failed to give any evidence in support of this allegation. In fact, Mr. Simonette gave

evidence that in or around mind-November 2013, he telephoned Mr. Ramdeen on at least 8

occasions but he never returned his calls or his messages but for one occasion when they

agreed to meet at Mr. Ramdeen’s office. Upon his arrival at Mr. Ramdeen’s office, Mr.

Ramdeen was not there.

42. In my opinion, therefore, based on this evidence and the correspondence exchanged between

the respective Attorneys-at-Law, the Claimant did not insist on strict compliance with the

deadline of 15th September 2013 for the finalization of the Arbitration Documentation. In fact,

I am satisfied that up to 11th November 2013 the parties were jointly engaged in doing all that

was necessary to ensure that the arbitration was ready to proceed in early December 2013. In

the circumstances, I find that the Claimant waived the requirement for the Arbitration

Documentation to be finalized by 15th September 2013 and I do not accept the Claimant’s

contention that since the deadline of 15th September 2013 was not met, the Claimant was no

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longer bound by its undertaking not to enforce the Judgment and that it was entitled to re-

register the Judgment at any time thereafter.

The Defendant’s alleged breach of the Agreement

43. By letter dated 9th January 2014, Mr. Simonette notified Mr. Ramdeen of the re-registration of

the judgment based on (i) the Defendant’s failure to sign the Arbitrator’s terms of reference,

and (ii) its disregard of the agreed time-table with impunity.

44. On 11th November 2013 at 12.48 p.m., Ms. Vailloo wrote to Ms. Jaggernauth in the following

terms:

“We agree to your proposal regarding the request for the reasoned award and have revised

paragraph 8 of the agreement to reflect this.

Kindly confirm your agreement to the proposed timetable set out in paragraph 15.

We look forward to your early reply.”

45. On the same day at 12.54 p.m., Ms. Jaggernauth replied as follows:

“The contents of your email are duly noted with thanks.

I will liaise with Counsel in relation to the revised dates and revert to your goodself.”

46. According to Mr. Simonette’s evidence, he made several unsuccessful attempts to contact Mr.

Ramdeen in mid-November and early December 2013. According to Ms. Vailloo, all attempts

to ascertain the Defendant’s position were unsuccessful and on 19th December 2013, she was

instructed by the Claimant to re-register the judgment for the balance of the judgment that was

unpaid, having taken into account the payment of $8.5M by the Defendant. Accordingly, the

judgment was re-registered for $8,083,259.94 with interest at the rate of 12% per annum from

28th August 2013 to the date of payment.

47. I have noted that although the Defendant referred to Mr. Simonette’s letter dated 9th January

2014 at paragraph 42 (g) of its Defence and Counterclaim, the Claimant did not respond to this

subparagraph in its Defence to Counterclaim. Further, the Claimant did not allege that its re-

registration of the judgment was a consequence of any default of the Defendant after the 15th

September 2013. However, notwithstanding this omission from its pleaded case, Mr. Simonette

gave the following evidence to explain the Claimant’s decision to re-register the judgment:

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“It was my understanding that judgment could be re-registered only if HDC failed to take

part in arbitration by December. Whether or not arbitration took place, the payment would

be converted to use of Claimant.

I would expect that client would be able to re-register judgment and keep the $8.5M

payment. If there was no hearing in early December, Claimant would be entitled to re-

register judgment and keep the $8.5M. The claimant is entitled to re-register judgment if

they did not finalise arbitration document or proceed to arbitration in early December.”

48. Bearing in mind my earlier finding that the Claimant waived the requirement for the

Arbitration Documentation to be finalized by 15th September 2013, I am of the opinion that

time was not of the essence with regard to the finalization of the Arbitration Documentation

as well as the arbitration hearing in early December 2013.

49. Therefore, if the Claimant was of the view that the Defendant was guilty of undue delay in

responding to Ms. Vailloo’s email dated 11th November 2013, it ought to have given notice

requiring the Defendant to agree to the terms of reference and to the proposed timetable within

a reasonable time.14 However, the Claimant did not give any such notice to the Defendant and

proceeded to re-register the judgment. Accordingly, the Claimant has failed to prove that it

was entitled to re-register the judgment based on the Defendant’s failure to sign the

Arbitrator’s terms of reference and/or its disregard of an agreed timetable.

50. Further, I am of the opinion and so find that by re-registering the judgment on the 19th

December 2013, without the Defendant being in default of the terms of the Agreement, the

Claimant committed a breach of the Agreement.

Damages for Breach of the Agreement

51. Mrs. Peake, SC submitted that on an interpretation of the plain meaning of the Agreement, the

$8.5M was only non-refundable subject to the condition that the Claimant perform the

contractual obligation that the Judgment was not re-registered. Having re-registered the

judgment, the Claimant was liable to refund the $8.5M. In response, Mr. Dass submitted that

the fundamental nature of a claim for damages for breach of contract was compensatory for

the loss of bargain and is designed to put the innocent party in the position that he would have

been in had the contract been performed rather than the position he would have been in had

14 Chitty (supra) at para. 21-014

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no contract been made. On a plain reading of the Agreement, if the parties had proceeded to

arbitration, the part payment of $8.5M was non-refundable and so would not, in any event, be

recovered by the Defendant. Further, Mr. Dass submitted that the Defendant could not recover

more than it would have been entitled to had the Claimant not breached the Agreement.

52. Halsbury’s Laws of England states as follows in relation to the appropriate measure of

damages: 16

“499. The normal function of damages for breach of contract is the same as that in tort:

namely, compensatory, aiming to compensate the true loss suffered by the innocent

party and place him in the same position, so far as money can do it, as if the contract had

been performed. Only in exceptional circumstances do courts depart from this policy and

award some greater sum.

Unlike many torts, a breach of contract is actionable per se: from this it follows that a

claimant who proves a breach, even if he proves no recoverable loss at all, is entitled at

least to a nominal award…”

53. Had the Agreement been performed, the parties would have finalized the Arbitration

Documentation and proceeded to arbitration to determine the balance to which the Claimant

may be entitled. In addition, the Judgment would have not have been re-registered or enforced

unless, after the Arbitrator made an award in favour of the Claimant, the Defendant failed

and/or refused to pay the Claimant. In that event, the Claimant could apply to the Court for

permission to enforce the award, enter a judgment against the Defendant and register same.17

Most importantly, the Claimant would have retained the $8.5M since the parties agreed that

this amount was paid towards the damages claimed by the Claimant in CV 2012-2508.

54. In the circumstances, I accept the submission of Mr. Dass that the Defendant is not entitled to

a refund of the payment of $8.5M as damages for the Claimant’s breach of the Agreement.

55. Apart from the Defendant’s claim for the refund of the $8.5M, the Defendant failed to lead

any evidence to prove that it suffered any loss as a consequence of the Defendant’s breach.

However, wherever a Defendant is liable for breach of contract, the Claimant is in general

entitled to nominal damages although no actual damage is proved.18 Accordingly, I am minded

16 Volume 29 (2014) at para. 499. 17 Section 20, Arbitration Act, Chapter 5:01; Rule 44.10 of the Civil Proceedings Rules 1998 (as amended) 18 Chitty (supra) at para. 26-009.

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to award the Defendant the sum of $5,000.00 as nominal damages for breach of the

Agreement.

Unjust Enrichment

56. I am of the opinion that Defendant is not entitled to a refund of the $8.5M on the basis of

unjust enrichment for the reasons set out hereunder.

57. According to Goff & Jones in The Law of Unjust Enrichment:19

“1-09 … a claimant must demonstrate three things in order to make out a cause of action

in unjust enrichment: that the defendant has been enriched, that this enrichment was

gained at the claimant’s expense, and that the defendant’s enrichment at the claimant’s

expense was unjust. If these three requirements are all satisfied, then the further question

arises, whether there are any defences to the claim, and if there are not, then the court

must decide what remedy should be awarded…”

58. On the facts of this case, it is undisputed that the Claimant would have received the $8.5M

from the Defendant. This amounts to enrichment as the Claimant would have received value

from the Defendant.20 Accordingly, this would have been at the Defendant’s expense.21 As to

the third limb of whether this enrichment at the Defendant’s expense was unjust, Goff (supra)

states that this is based on legally recognised factors referred to “unjust factors”.

59. The Defendant has submitted that the Claimant’s enrichment is unjust because there is a total

failure of consideration. Halsbury’s Laws of England22 states as follows in relation to the

total failure of consideration:

“492. The claim of the innocent party is one to recover upon a total failure of

consideration; it does not arise where the failure is only partial. When seeking to determine

whether or not there has been a total failure of consideration, it is always necessary to

analyse carefully the nature of the contract between the parties. The task of the court is not

to determine whether or not the claimant has received a specific benefit as a result of any

performance on the part of the defendant but whether the defendant has performed any

part of the contractual duties in respect of which the payment is due. Therefore the fact

19 (2011), 8th Edition at para. 1-09. 20 Halsbury’s Laws of England, Volume 88 (2012) at para. 412. 21 Goff (supra) at para. 1-15. 22 Volume 88 (2012) at para. 492.

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that the claimant has enjoyed some benefit does not prevent there being a total failure of

consideration provided that the benefit which the claimant obtained was not one for which

he had bargained. Similarly, the fact that the defendant has incurred significant

expenditure in the performance of the contract does not mean that there has not been a

total failure of consideration: if the defendant has not commenced performance of the

obligation for which payment is to be made there is still a total failure of consideration. It

can be a difficult task in certain cases to determine whether or not the failure of

consideration has been total…”

60. Goff (supra) put it this way:

“12-24 Taken literally, the requirement of total failure of basis would suggest that

wherever a claimant has received anything at all in return for the payment, no claim of

unjust enrichment can lie. However, the courts have not adopted a literal approach. Three

considerations have emerged. First, although the claimant might have received some

benefit, if that benefit does not form part of what was understood to be given for the

payment, the claim for total failure of basis remains intact… Secondly, the courts disregard

benefits potentially forming part of the basis for payment where the claimant has exercised

his or her legal rights so as to reject those benefits. Thirdly, it may be possible to sever the

payment, and allocate parts of it to distinct elements of the benefit in return for which the

payment was made…”

61. Mrs. Peake, SC submitted that the Claimant was in breach of the implied term of the

Agreement not to re-register the judgment on the receipt of the $8.5M and this amounted to a

total failure of consideration in that the benefit which was bargained for by the Defendant had

not been obtained. She further submitted that the object of the Agreement was to ensure that

the judgment did not constitute an equitable charge against the real property of the Defendant.

Therefore, as a consequence of the re-registration of the judgment by the Claimant, there was

a total failure of consideration which entitled the Defendant to the repayment of the $8.5M.

Mr. Dass submitted that having regard to the terms of the Agreement there was no unjust

element since the payment of $8.5M was expressly described as non-refundable. Further, on

the unchallenged evidence before the Court, the Defendant obtained considerable benefit

under the Agreement because the registration of the judgment had been released between 28th

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August and 19th December 2013. Therefore, the Defendant had failed to establish that there

had been a total failure of consideration.

62. On the evidence, the dispute did not proceed to arbitration but the judgment was released by

the Claimant in pursuance of the Agreement for the period 28th August 2013 to 19th December

2013. In her witness statement, Mrs. Mc Farlane-Lee gave evidence that although according

to the records of the Defendant, no monies were due to the Claimant, in the light of the urgent

necessity to have the Judgment removed in order for the Defendant to be able to continue to

sell and lease housing units to citizens in need of housing, the Defendant authorised the

payment of the $8.5M on condition that the Judgment would be de-registered, no attempt

would be made by the Claimant to enforce same and the parties would proceed to arbitration.

63. In my view, the basis for the payment of the $8.5M by the Defendant was:

i. To secure the release of the registered judgment;

ii. To ensure that the resolution of the balance of the Claimant’s claim and interest would

proceed by way of arbitration instead of the entire claim proceeding before the High

Court; and

iii. To ensure that the Judgment would not be re-registered or enforced by the Claimant

until the hearing and determination of the arbitration.

64. As earlier stated, the Claimant released the registered judgment on the 28th August 2013 and

the same was not re-registered until 19th December 2013. As a consequence, I am of the

opinion that the Defendant has failed to prove that there was a total failure of consideration

since it received the benefit of the release of the judgment over that period and this amounted

to partial consideration.

65. Further, the Defendant has failed to prove that: (a) the benefit it received did not form part of

what was understood to be given for the payment; (b) it has exercised its legal right to reject

the benefit; or (c) it may be possible to sever the payment and allocate parts of it to distinct

elements of the benefit in return for which the payment was made.23

66. Further, the express terms of the Agreement provided that the $8.5M payment would be a

non-refundable part-payment towards damages due to the Claimant as set out in the Amended

23 See para. 60 above.

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Claim Form and Statement of Case. In answer to questions posed by the Court, Ms. Mc

Farlane-Lee agreed that the $8.5M was considered by the Defendant as a part payment on

account of the entire claim made by the Claimant in the Amended Claim Form and Statement

of Case and that what would go forward to arbitration would be whether or not there any more

money due and owing by the Defendant to the Claimant.

67. In my opinion, to permit the Defendant to succeed in its Counterclaim based on unjust

enrichment would subvert the contractual bargain which it entered into. As Goff (supra) states:

“12-20 … The law rightly recognises that unjust enrichment claims should not be permitted

where that would, in effect, subvert the parties’ contractual bargain… It is also appropriate

that parties should not be permitted to obtain awards of damages for breach of contract

that put them in a better position than if the contract had been fully performed…”

ORDER

68. In the premises, I hereby order that:

i. The Claimant’s Claim is dismissed;

ii. The Defendant’s Counterclaim for the repayment of the sum of $8,500,000.00 based

on unjust enrichment is dismissed;

iii. The Defendant is entitled to nominal damages for the Claimant’s breach of the

Agreement in the amount of $5,000.00; and

69. In the light of my rulings in this matter, I now invite the parties to address me on the

appropriate order for costs, bearing in mind that this Court approved a cost budget for these

proceedings on 18th November, 2014.

Dated this 16th day of November, 2016

……………………………

André des Vignes

Judge

the republic of trinidad and tobago in the high...

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