The British Virgin Islands Electricity Corporation Appellant v Shell Antilles and Guanas Ltd Respondent

• Jurisdiction: British Virgin Islands
• Court: Court of Appeal (British Virgin Islands)
• Judge: BISHOP, C.J. (Ag.)
• Judgment Date: 25 June 1990
• Neutral Citation: VG 1990 CA 1
• Judgment citation (vLex): [1990] ECSC J0625-1
• Docket Number: CIVIL APPEAL NO. 5 of 1989
• Date: 25 June 1990

[1990] ECSC J0625-1

IN THE COURT OF APPEAL

Before:

The Honourable Mr. Justice Bishop-Chief Justice (Acting)

The Honourable Mr. Justice Moe, J.A.

The Honourable Mr. Justice Byron, J.A. (Acting)

CIVIL APPEAL NO. 5 of 1989

Between:

The British Virgin Islands Electricity Corporation

Appellant

and

Shell Antilles and Guanas Limited

Respondent

Appearances:

Dr. F. Ramsahoye, Q.C. & P. Webster, for Appellant

J. Archibald, Q.C. & Mr. Bennet & Ms. O'Neal, for Respondent

BISHOP, C.J. (Ag.)

1 By a written agreement dated 3rd August 1985, Shell Antilles and Guianas Limited (also called herein shell) of Bridgetown, Barbados, a company incorporated in England and having a place of business in Road Town, Tortola, agreed to sell to British Virgin Islands Electricity Corporation (also referred to herein as the Corporation), a statutory corporation established under the British Virgin Islands Corporation Act, 1978, which agreed to buy from that company "the buyer's total requirements of petroleum products, in particular, automotive gas oil, premium gasoline, lubricating oils and greases, as the buyer may from time to time require for use.…at its power stations in the British Virgin Islands".

2 The commencement and duration of this Supply Agreement were stated in the first clause thus:

"This Agreement shall have effect from the 3rd day of August 1985 and shall continue in force until the 2nd day of August 1987 and thereafter until either party gives to the other three (3) months' notice of its intention to terminate this Agreement."

3 Clause 15 of the said Agreement dealt with termination thus:

"In the event of a material breach of any terms of this Agreement by either the Buyer or Seller, the party not in breach shall be entitled to terminate this Agreement by giving three (3) months' notice in writing to the other party, provided however that if the party in breach shall within the period of notice remedy such breach to the satisfaction of the other party, notice of termination shall be withdrawn."

4 As far as notices were concerned, clause 20 stipulated:

"Unless otherwise agreed, all notices given here-under shall be served in writing to the addresses of the Buyer or Seller, as the case may be, as stated at the beginning of this Agreement."

5 On July 27, 1987 the solicitors for shell wrote the Corporation stating, inter alia:

• "2. We are to invite your attention to the allequed remarks of one of the Directors of the Board of the above-mentioned Corporation……..set forth on pages 1 and 12 of the newspaper The BVI Beacon published in Tortola July 23, 1987 to the effects that a third party will become the supplier of fuel to the Corporation as from August 3, 1987.

• 3 ……..if the said remarks are true, the Corporation will be in breach of this Agreement because our clients have not been given three months' written notice of the Corporation's intention to terminate this Agreement as required by Clauses 1 and 20 of this Agreement; and that such a breach will cause our clients serious financial loss and damage for which the corporation will be held responsible."

6 The letter also pointed out that shell would continue to provide reliable service at the highest standards.

7 It was made clear therefore that shell was not only allegina a breach of contract on the part of the Corporation, but also that shell would regard the Corporation as responsible or liable for the serious financial loss and damage which it would suffer as a consequence of that breach.

8 On July 28, 1987 the secretary/accountant of the Corporation wrote the Manager of shell as follows:

"I am directed by the BVI Electricity Corporation to refer to Para 1 of the Supply Agreement between shell Antilles & Guianas Ltd. and the BVI Electricity Corporation dated 3rd August 1987 whereby the parties entered into a two (2) year Supply Contract from August 3, 1985 to August 2, 1987 and to inform you that the Corporation will on longer require supply of petroleum products after 2nd August 1987."

9 In another letter dated August 13, 1987, the secretary/accountant informed the solicitors for shell that in respects of the letter of July 27, 1987 he was directed to say

"that it is the understanding of the Corporation that the Agreement was for a period of the two (2) years ending 2nd August 1987 and notice was given verbally and in writing to the Manager of shell Antilles and Guianas Limited of the Corporation's intention to cease purchasing of products from that date. A copy of the written notice is enclosed for your information and record."

10 There was an obvious difference of opinion. It was not resolved, and on the 8th september 1987, shell filed suit 104 of 1987 (in the High Court) asking for determination of the following issues:

(1) Whether a notice in writing dated July 28, 1987 given on behalf of the Corporation to the Company's manager in Tortola, terminating on August 2, 1987 an agreement in writing dated August 3 1985, between the Company, as Seller and the Corporation, as Buyer of petroleum products, was given in accordance with the terms of the said Agreement, and (2) whether the said notice was effective to terminate the said Agreement, or was otherwise of no effect and inoperative?

11 On the 8th February 1989, Bertrand, J. answered the above questions thus: (1) The notice in writing dated July 28, 1987 given tot he plaintiff's manager in Tortola, terminating on August 2, 1987 the written Agreement dated August 3, 1985 was not given in accordance with the terms of the said Agreement, and (2) the said notice was not effective to terminate the Agreement dated August 3 1985 and is therefore inoperative. The answers were embodied in an order entered on 13th February 1989 and in which the Defendant was ordered to pay the plaintiff's costs, to be taxed unless agreed.

12 There the matter rested for about seven months before the solicitors for shell Antilles and Guianas Limited filed-on the 8th September 1989, a Writ of Summons (No. 126 of 1989) in which the Company claimed damages for breach of the Agreement dated August 3, 1985, between the plaintiff as Seller and the Defendant as Buyer of petroleum products "by wrongfully terminating the said Agreement on August 2nd 1987 by a notice dated July 28, 1987 as determined by a judgment of this High Court of Justice dated February 8, 1989 and entered February 13, 1989 on an originating Summons issued September 2, 1987 in Civil Suit No. 104 of 1987 between the same parties as are parties in this action." There was also a claim for costs and further or other relief.

13 A Statement of Claim and a Defence were filed on 17th October 1989 and 23rd November 1989 by the solicitors for the respective parties.

14 On the 25th November 1989 the solicitors for the Corporation filed a Notice of Motion seeking leave of this Court to Appeal out of time against the judgment in Suit 104 of 1987 and an Order that the hearing of the application be treated as the hearing of the appeal. It is appropriate to state the following grounds on which the Motion was based:

• "3. The Appellant was dissatisfied with the judgment but did not appeal because no damages had been claimed and the Appellant being a public body did not wish to continue the litigation by reason of the expense involved therein and because it wished to bring the litigation to an end.

• 4. On the 17th October 1989 the Respondent, in a new Suit No. 126 of 1989, served a Statement of Claim claiming damages including special damages in the sum of $524, 890 against the Appellant, interest and other relief for breach of the same agreement which was the subject of the proceedings in Suit No. 104 of 1987.

• 4. The judgment in the said Suit No. 104 of 1987 is erroneous in that the Agreement was in law effectively terminated and it will be a grave miscarriage of justice if the Respondent is allowed to claim damages in these proceedings as well as costs in addition to the costs awarded in Suit No. 104 of 1987 on the basis of a judgment which is incorrect.

• 6. It is contrary to the public interest that the erroneous sums claimed by the Respondent should be claimed and/or paid on the basis of an erroneous judgment."

15 Ronnie W. Skelton, General Manager of the Corporation, swore an Affidavit in Support of the Motion. He referred to Suit No. 104 of 1987 and to the judgment delivered therein on the 8th February 1989; and, among other facts set out and relied on, were the following:

• "3. The Appellant which is a public body managing public assets and public funds, was advised by its legal advisors that the judgment was erroneous but the Appellant did not appeal because no damages were claimed and the Appellant did not consider it in the public interest to continue the litigation with the costs and expense it would entail and in the circumstances the Appellant abided by the judgment.

• 4. ………………

• 5. I am advised by Counsel and verily believe that the High Court was in error in holding that agreement dated 3rd August 1985 had not been terminated by three months' notice.

• 6. I am further advised by Counsel and verily believe that a notice dated 28th July 1987 given by the Appellant to the Respondent was effective to terminate the agreement dated 3rd August 1985 at the end of two years of its life."

16 The Affidavit also referred to the second Suit No. 126 of 1989 and to the fact that the Pleadings had reached the stage where a Defence was filed and served.

17 If, at July 27, 1987, shell held the view that there would be a breach of the Supply Agreement-if the reported remarks of a Director of the Corporation were true-and that a serious financial loss and damage would thereby be caused the Company and for which the Corporation would be regarded as responsible, then it may be asked why could it not have brought one action against the company for breach of contract and conseqential loss and...