Yates Associates Construction Company Ltd Appellant v Blue Sand Investments Ltd Respondent

• Jurisdiction: British Virgin Islands
• Judge: Blenman, JA,Justice of Appeal,Louise Esther Blenman,Mario Michel,Ola Mae Edwards
• Judgment Date: 20 April 2016
• Neutral Citation: VG 2016 HC 5,[2016] ECSC J0420-1
• Court: Court of Appeal (British Virgin Islands)
• Docket Number: BVIHCVAP2012/0028
• Date: 20 April 2016

[2016] ECSC J0420-1

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mde. Louise Esther Blenman Justice of Appeal

The Hon. Mr. Mario Michel Justice of Appeal

The Hon. Mde. Ola Mae Edwards Justice of Appeal [Ag.]

BVIHCVAP2012/0028

Between:

Yates Associates Construction Company Ltd

Appellant

and

Blue Sand Investments Limited

Respondent

Appearances:

Mr. Terrance Neale for the Appellant

Mr. Sydney Bennett, QC, with him, Ms. Anthea Smith for the Respondent

Civil appeal — Building contract — Defective Construction — Appeal against trial judge's findings of fact — Approach of appellate court to trial judge's findings of fact — Expert evidence — Expert's duty to the court — Part 32 of the Civil Procedure Rules 2000

The appellant, Yates Associates Construction Company Ltd ("Yates"), entered into an oral agreement with the respondent, Blue Sand Investments Limited ("Blue Sand"), to construct a house/villa on Blue Sand's property at Virgin Gorda in accordance with architectural designs and drawings to be supplied by Blue Sand. During pre-contractual discussions, Ms. Christina Yates acted on behalf of Yates and Mrs. Lyn Hill, Mr. Frederick Hill (the "Hills") and Mr. Jon Nathanson ("Mr. Nathanson") acted on behalf of Blue Sand.

The parties relied on oral representations of persons acting on their behalf and on a written budget estimate of $2,542,151.70 ("the Budget") compiled by Yates. The budget was formulated on the basis of blueprints and drawings by Mr. Lyndon Massicott ("the Massicott drawings"), which were prepared upon the instructions of Mr. Nathanson. Yates commenced work on the villa in April 2007. The Massicott drawings were subsequently adjusted to comply with Blue Sand's licence to own land and substantial variations were also required by Mr. Nathanson due to design changes requested by Blue Sand. These changes were made by Ms. Avaline Potter ("Ms. Potter"), acting on the instructions of Mr. Nathanson.

Yates began experiencing problems on the project very early in the construction; nevertheless, the villa was substantially completed in or around January 2010. Blue Sand by its director Mrs. Hill went into occupation in or about February 2010. A number of defects were found with the villa and they were brought to the attention of Yates. Yates remedied some of the defects but was not permitted to remedy others. In or about June 2010, Blue Sand asked Yates to cease all work on the villa and Yates complied.

Prior to this, Yates submitted an invoice to Blue Sand ("Certificate No. 13") totaling $260,837.36 for work done on the site up to that time. However, Yates was not paid and their subsequent attempts to obtain payment from Blue Sand were unsuccessful. Yates eventually instituted a claim against Blue Sand seeking $260,837.36 for payment under Certificate No. 13; $98,311.20 in respect of retention monies; and alternatively, payment on a quantum meriut for work done at Blue Sand's request.

Blue Sand admitted that items totaling $191,616.92 under Certificate No. 13 had been billed in accordance with the agreement and the sum was therefore due and payable to Yates. However, Blue Sand averred that it had already paid certain sums under the agreement and that Yates had been overpaid in the sum of $163,617.76 in respect of unilateral changes to the Budget prices on items in the Budget and it was therefore entitled to have that sum set off against the amount due under Certificate No. 13. Blue Sand also averred that there were sums claimed and unpaid under Certificate No. 13 which were in respect of items on which payment was not due. Additionally, Blue Sand counterclaimed for damages for defects in the sum of $1,104,747.67; and $90,160.00 for loss of rental income.

The trial judge noted that central to the issue of overpayment was whether Mr. Nathanson had real or ostensible authority to make design changes and order variations in the works and agree terms of payment on behalf of Blue Sand. She found that he did. She therefore concluded that variations that were made to the contract/agreement and that were paid for by Blue Sand were due to Mr. Nathanson's authorization, acting as agent for Blue Sand and/or on Blue Sand's consent and knowledge and that Blue Sand was not entitled to a refund of any such sums.

The learned trial judge then went on to make a number of other factual findings in relation to the sums claimed by Yates for items under Certificate No. 13 and defects in construction alleged by Blue Sand. She examined the specific issue of overpayment in in relation to each item under Certificate No. 13 and rejected Blue Sand's claim for overpayment. In relation to the remedying of defective construction works, the learned judge's findings were mostly in favour of Blue Sand. She noted that although Yates accepted liability for some of the defects, it only proffered a global sum of $25,000.00 for remedying the defects and went on to hold that the costs of making good the defects found attributable to Yates were to be awarded and calculated on the values given in a report given by Mark Hodkinson. In respect of the retention monies, the learned judge found that it could be readily implied that the parties intended to make provision for some form of retention and a reasonable defects liability period. The judge found that a period of 6 months to remedy the defects was reasonable and that Yates had done little to do so and that Blue Sand's action in seeking alternative solutions was not unreasonable. In relation to the loss of rental income, the judge found that Blue Sand did not establish that the villa was intended for rental and that Yates knew of this at the time they entered into the contract. Finally, the judge dismissed Yates' claim for miscellaneous charges under Certificate No. 13.

Both parties were dissatisfied with the learned trial judge's findings of fact, her apportionment of liability and her award as to damages and each filed a number of grounds of appeal against those factual findings.

Held: allowing Yate's appeal on all grounds save and except in relation to one finding of fact; dismissing Blue Sand's cross-appeal on all grounds except one; ordering that Yates is entitled to its claim for miscellaneous charges set out in Certificate No. 13; making the orders as set out at paragraph 137 of this judgment; and making the costs order as set out at paragraph 139 of this judgment, that:

• 1. An appellate court reviewing the findings of a trial judge on the printed evidence in relation to a question of fact tried by the judge without a jury and where there is no question of the judge misdirecting himself, should not interfere with the trial judge's decision unless it is satisfied that any advantage enjoyed by the trial judge by reason of having seen and heard the witnesses could not be sufficient to explain or justify the judge's conclusion. In the circumstances, the appellate court may consider that, without having seen or heard the witnesses, it is not in a position to come to any satisfactory conclusion on the printed evidence. However, either because the reasons given by the trial judge are unsatisfactory, or because it is clearly appears so from the evidence, an appellate court may be satisfied that the trial judge has not taken proper advantage of his having seen and heard the witnesses and the matter will then become at large for the appellate court.

  Watt or Thomas v Thomas [1947] AC 484 applied; In re (A Child)(Care Proceedings: Threshold Criteria) [2013] 1 WLR 1911 applied; Assicurazioni Generali SpA v Arab Insurance Group (BSC) [2002] EWCA Civ 1642 applied; In re (A Child)(Care Proceedings: Threshold Criteria) [2013] 1 WLR 1911 applied; Beacon Insurance company Limited v Maharaj Bookstore Limited [2014] UKPC 21 applied.

• 2. Appellate court restraint against interfering with findings of fact, unless compelled to do so, applies not only to findings of primary fact, but also to the evaluation of those facts and inferences to be drawn from them. Where a judge draws inferences from his findings of primary fact which have been dependent on his assessment of the credibility or reliability of witnesses who have given oral evidence, and of the weight to be attached to their evidence, an appellate court has to be similarly cautious in its approach to his findings of such secondary facts and his evaluation of the evidence as a whole. It is only in exceptional circumstances that an appeal court is entitled to take a different view on credibility from that of the judge who has seen the witness, particularly when the judge has referred favourable to the demeanour of the witness concerned.

  Central Bank of Ecuador and others v Conti Comp SA and others [2015] UKPC 11 applied; Margaret Blackburn v James A.L. Bristol GDAHCVAP2012/0019 ( delivered 12th October 2015, unreported) applied; Henderson v Foxworth Investments Limited and another [2014] UKSC 41 applied; In re (A Child) (Care Proceedings: Threshold Criteria) [2013] 1 WLR 1911 applied.

• 3. Where the trial judge fails to make proper use of the advantage he or she possesses in analyzing and carrying out an evaluation of the evidence, the judge's decision cannot stand if the decision does not comport with the evidence that was adduced. The critical question before an appellate court is whether there was evidence before the trial judge from which the judge could properly have reached the conclusions that he or she did or whether, on the evidence, the reliability of which it was for the judge to assess, that the judge was plainly wrong.

  Justus William v Evely Inglis SLUHCVAP2013/0032 ( delivered 28th October 2015, unreported) applied; Marie Makhoul v Cicely Foster et al ANUHCVAP2009/0014 ( delivered 23rd February 2015, unreported) applied; Biogen Inc v Medeva plc [1997] RPC 1, 45 applied; Housen v Nikolaisen applied [2002] 2 SCR 235; Chiverton Construction...