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THE REPUBLIC OF TRINIDAD AND TOBAGO

IN THE HIGH COURT OF JUSTICE

Claim No. CV2015 – 02621

BETWEEN

MC KENZIE RENTAL AND TAXI SERVICE LIMITED

Claimant

AND

HUAWEI TECHNOLOGIES (T&T) LIMITED

Defendant

BEFORE THE HONOURABLE MR. JUSTICE PETER A. RAJKUMAR

APPEARANCES

Mr. S. Kingston for the Claimant

Mr. Bryan McCutcheon for the Defendant

ORAL JUDGEMENT

Background

1. The Claimant’s claim is for, inter alia, damages in the sum of $1,835,419.80

comprising:

b) damages for breach of contract (1st May 2015 – 31st October 2016) in the sum of

$1,500,750.00 and;

c) cost of repairs to leased and special use vehicles in the sum of $334,669.80.

2. The claimant’s claim is based upon the allegation that the defendant terminated the

contract wrongfully, and in breach of its terms. The defendant contends that it terminated the

contract lawfully and in accordance with the applicable termination clause in the contract by

providing the required one month’s notice.

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3. It denies that the contract in those circumstances could have been automatically

renewed for a period of 2 years so as to entitle the claimant to claim damages for breach of

contract on that basis.

4. It claims that although it was agreed that the claimant would pay for the cost of

repairs necessary in relation to the leased vehicles, that agreement was based on the express

conditions and terms that the repairs and their costs be preapproved by the claimant.

5. Instead the claimant simply submitted invoices without the costs being preapproved

as agreed. Despite requests by the defendant, apart from the invoices, there is surprisingly

little documentation provided or disclosed to establish or confirm the reasonableness of the

quantum of the alleged repairs, whether they were even effected, or that if they were effected,

whether at a reasonable cost.

Issues

6.

1. Whether the contract, executed on 1st May 2013, was lawfully terminated in

accordance with Clause 10(a) thereof by the issue of a notice pursuant thereto.

i. Whether, properly construed, Clause 13(h) of the Contract prescribed as a

requirement for valid notice of termination that such notice must have been given at

least one month prior to a date of automatic renewal;

ii. Whether failure to comply with the requirement above rendered the notice invalid

such that the contract was not terminated on 8th November, 2014.

2. Whether the parties agreed (as per the agreement reached on 13th May 2015 and

reflected in the Minutes of the Meeting dated 15th May 2015) on the cost of the

repairs.

3. Whether the claimant has sufficiently proved the quantum of the reasonable cost of

repairs, whether effected or not.

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Conclusion

7.

a. The contract executed on May 1st 2013 was lawfully terminated in accordance with

Clause 10(a) thereof by the issue of a notice pursuant thereto.

b. The parties never agreed on the cost of repairs and the claimant has to date continuously

ignored the further agreement at the meeting of May 13th 2015 that the mechanism for

reimbursement must involve prior approval of those costs by the defendant and the claimant.

c. The claimant has not sufficiently proved the quantum of the reasonable cost of repairs,

whether effected or not.

Disposition

8.

a. The claimant’s claim for damages for breach of contract must therefore be dismissed,

with costs to be paid by it.

b. The claimant in the circumstances can recover only $40,000.00 as damages in respect of

its largely unproven claim for repairs, the majority of which are not substantiated or

strictly proved.

Orders

9.

i. The claimant’s claim for damages for breach of contract is dismissed.

ii. The claimant is to pay to the defendant costs on the basis of its claim in the sum of

$1,500,750.00 for damages for breach of contract calculated as prescribed by the Civil

Proceedings Rules in the sum of $134,037.50.

iii. The defendant is to pay to the claimant the sum of $40,000.00 as damages in respect

of the cost of repairs to be set off against the costs payable by the claimant to the

defendant.

Oral decision delivered on the 3rd March 2016

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Reasons for Decision

Analysis and Reasoning

Whether the contract was lawfully terminated

Undisputed Facts

10. A Vehicle Rental Agreement was executed on 1st May 2013 (“the Contract”),

supplemented thereafter by addenda.

11. Clause 10 (a) provides:

“Either party may terminate this Agreement by giving a one (1) month written

notice to the other party”.

12. Clause 13 (h) provides:

“Effectiveness; Term. This Agreement shall come into force when both Parties have

signed it. This Agreement shall be in effect for a probation (sic) period of six (6)

months after which upon satisfaction of the service offered the contract shall be

extended for a period of one year from the Effective Date. This agreement shall be

extended automatically for successive periods of every two (2) years, unless either

Party provides a notice of termination at least one (1) month prior to the expiration

of the existing term”.

13. An addendum executed between the parties in November 2013 extended the period of

the Contract from 1st November 2013 to 31st October 2014 and modified the price list.

14. On 8th October 2014, a notice of termination was served on the Claimant (“the

Notice”). (See Paragraph 7 statement of case).

The Defendant’s Case

15. The Defendant claims that on 8th October 2014, when the Defendant served a written

notice on the Claimant (in accordance with clause 10 of the Contract), the Contract was

terminated 30 days thereafter (i.e. 8th November 2014) and came to an end.

The Claimant’s Case

16. The claimant’s claim for damages in the sum of $1,500,750.00 represents 18 months

rental and is therefore being claimed at the rate of $83,375.00 per month. (This figure can be

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correlated to, and therefore be particularised from, paragraph 6 of the amended statement of

case).

17. The Claimant’s case is based on its interpretation of clause 13(h). However clause

13(h) deals not with termination, but with extension of the contract. It provides, in default of

express extension, for automatic extension. It recognises that a notice of termination at least

one month prior to the expiration of the existing term could prevent automatic extension.

18. Arnold v Britton [2015] AC 1619 paragraphs14-23 (All emphasis added)

INTERPRETATION OF CONTRACTUAL PROVISIONS

[14] Over the past 45 years, the House of Lords and Supreme Court have discussed

the correct approach to be adopted to the interpretation, or construction, of contracts

in a number of cases starting with Prenn v Simmonds [1971] 3 All ER 237, [1971] 1

WLR 1381 and culminating in Rainy Sky SA v Kookmin Bank [2011] UKSC 50,

[2012] 1 All ER 1137, [2011] 1 WLR 2900.

[15] When interpreting a written contract, the court is concerned to identify the

intention of the parties by reference to “what a reasonable person having all the

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

understood them to be using the language in the contract to mean”, to quote Lord

Hoffmann in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38, [2009] 1 AC

1101, para 14, [2009] 4 All ER 677. And it does so by focussing on the meaning of the

relevant words, in this case cl 3(2) of each of the 25 leases, in their documentary,

factual and commercial context. That meaning has to be assessed in the light of:

(i) the natural and ordinary meaning of the clause,

(ii) any other relevant provisions of the lease,

(iii) the overall purpose of the clause and the lease,

(iv) the facts and circumstances known or assumed by the parties at the time that the

document was executed, and

(v) commercial common sense, but

(vi) disregarding subjective evidence of any party's intentions.

In this connection, see Prenn at pp 1384 – 1386 and Reardon Smith Line Ltd v Yngvar

Hansen-Tangen (trading as HE Hansen-Tangen) [1976] 3 All ER 570, [1976] 2

Lloyd's Rep 621, [1976] 1 WLR 989, 995 – 997 per Lord Wilberforce, Bank of Credit

and Commerce International SA (in liquidation) v Ali [2001] UKHL 8, [2002] 1 AC

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251, para 8, [2001] 1 All ER 961, per Lord Bingham, and the survey of more recent

authorities in Rainy Sky, per Lord Clarke at paras 21 – 30.

[16] For present purposes, I think it is important to emphasise seven factors.

[17] First, the reliance placed in some cases on commercial common sense and

surrounding circumstances (e.g. in Chartbrook, paras 16 – 26) should not be invoked

to undervalue the importance of the language of the provision which is to be

construed. The exercise of interpreting a provision involves identifying what the

parties meant through the eyes of a reasonable reader, and, save perhaps in a very

unusual case, that meaning is most obviously to be gleaned from the language of the

provision. Unlike commercial common sense and the surrounding circumstances, the

parties have control over the language they use in a contract. And, again save

perhaps in a very unusual case, the parties must have been specifically focussing on

the issue covered by the provision when agreeing the wording of that provision.

[18] Secondly, when it comes to considering the centrally relevant words to be

interpreted, I accept that the less clear they are, or, to put it another way, the worse

their drafting, the more ready the court can properly be to depart from their natural

meaning. That is simply the obverse of the sensible proposition that the clearer the

natural meaning the more difficult it is to justify departing from it. However, that

does not justify the court embarking on an exercise of searching for, let alone

constructing, drafting infelicities in order to facilitate a departure from the natural

meaning. If there is a specific error in the drafting, it may often have no relevance to

the issue of interpretation which the court has to resolve.

[19] The third point I should mention is that commercial common sense is not to be

invoked retrospectively. The mere fact that a contractual arrangement, if interpreted

according to its natural language, has worked out badly, or even disastrously, for

one of the parties is not a reason for departing from the natural language.

Commercial common sense is only relevant to the extent of how matters would or

could have been perceived by the parties, or by reasonable people in the position of

the parties, as at the date that the contract was made. Judicial observations such as

those of Lord Reid in Wickman Machine Tools Sales Ltd v L Schuler AG [1974] AC

235, 251, [1973] 2 All ER 39, [1973] 2 WLR 683 and Lord Diplock in Antaios Cia

Naviera SA v Salen Rederierna AB (The Antaios) [1985] AC 191, 201, [1984] 3 All

ER 229, [1984] 3 WLR 592, quoted by Lord Carnwath at para 110, [1984] 3 All ER

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229, [1984] 3 WLR 592, have to be read and applied bearing that important point in

mind.

[20] Fourthly, while commercial common sense is a very important factor to take into

account when interpreting a contract, a court should be very slow to reject the

natural meaning of a provision as correct simply because it appears to be a very

imprudent term for one of the parties to have agreed, even ignoring the benefit of

wisdom of hindsight. The purpose of interpretation is to identify what the parties

have agreed, not what the court thinks that they should have agreed. Experience

shows that it is by no means unknown for people to enter into arrangements which

are ill-advised, even ignoring the benefit of wisdom of hindsight, and it is not the

function of a court when interpreting an agreement to relieve a party from the

consequences of his imprudence or poor advice. Accordingly, when interpreting a

contract a judge should avoid re-writing it in an attempt to assist an unwise party or

to penalise an astute party.

[21] The fifth point concerns the facts known to the parties. When interpreting a

contractual provision, one can only take into account facts or circumstances which

existed at the time that the contract was made, and which were known or reasonably

available to both parties. Given that a contract is a bilateral, or synallagmatic,

arrangement involving both parties, it cannot be right, when interpreting a

contractual provision, to take into account a fact or circumstance known only to one

of the parties.

[22] Sixthly, in some cases, an event subsequently occurs which was plainly not

intended or contemplated by the parties, judging from the language of their contract.

In such a case, if it is clear what the parties would have intended, the court will give

effect to that intention. An example of such a case is Aberdeen City Council v Stewart

Milne Group Ltd [2011] UKSC 56, 2012 SCLR 114, [2011] 50 EG 58 (CS), where the

court concluded that “any . . . approach” other than that which was adopted “would

defeat the parties' clear objectives”, but the conclusion was based on what the parties

“had in mind when they entered into” the contract (see paras 17 and 22).

[23] Seventhly, reference was made in argument to service charge clauses being

construed “restrictively”. I am unconvinced by the notion that service charge clauses

are to be subject to any special rule of interpretation. …

19. It was suggested that since the notice by the defendant was not at least one month

prior to the expiration of the existing term, that the contract must have been automatically

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extended for a further period of 2 years. This fails to recognise that, given its natural

meaning, a notice under Clause 10 (a) is not the same as a notice under Clause 13.

20. Further, even if it were so extended because no effective Clause 13 notice was served,

nothing in the natural meaning of the words used in this contract prevents one month’s notice

of termination under clause 10a from being effective and bringing the contract to an end. In

fact that is the natural meaning of the language used.

21. Even therefore if the contract had been deemed to be automatically renewed beyond

October 31st 2014 and continued thereafter, the one month notice dated October 8th 2014

could still have terminated the contract with effect from November 8th 2014.

22. The Amended Statement of Case paragraph 7:

“In or about the 8th October, 2014, the Defendant served on the Claimant a notice

to terminate the Vehicle Rental Contract, however, the notice provided was

invalid”.

23. In the witness statement of Vijay Seegobin the Claimant refers to the Notice:

“In accordance with legal advice I ignored the newly drafted contract on the

basis that the letter purporting to terminate the Vehicle Rental Contract was

ineffective, that is, the Defendant failed to provide one (1) month’s notice prior

to the date in which the contact automatically renewed for a period of two (2)

years, that is, until 31st October, 2016”. See paragraph 20 of the witness statement of

Vijay Seegobin, page 192 of the trial bundle

24. This is clearly based on a misapprehension as to the effect of each clause. Clause 10

provides a mechanism for termination of the contract by notice. It is not in any way

qualified or restricted by Clause 13(h).

25. Clause 13(h) deals with the circumstances under which the contract is deemed to have

been extended beyond its initial term. It provides “…the contract shall be extended

automatically for successive periods of every two (2) years, unless either Party provides a

notice of termination at least one (1) month prior to the expiration of the existing term.” If

the contract is not terminated at least one month prior to the expiration of the existing term it

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will be automatically extended. But even if automatically extended, the entirety of the

contractual terms will be extended, including Clause 10(a), by which the contract can be

terminated by one month’s notice.

26. Further, automatic extension cannot, and does not, mean that the contract must be

deemed to have been extended for a period of 2 years, without the possibility of termination

by one month’s notice under Clause 10. Clause 13, which deals with automatic extension of

the contract beyond its original term, is not incompatible with Clause 10, which provides for

termination.

27. The Defendant exercised a contractual right to terminate the contract under Clause 10.

The Claimant, through its then Attorneys-at-Law, I. Soyinka & Co., stated, inter alia, on 9th

October 2014, that section (sic) 10 “has to be read and interpreted against the backdrop of

section (sic) 13(h)”.

“Therefore any attempt to terminate our client’s contract under section (sic) 10… would

be illegal, unlawful and would constitute a breach of the said Agreement”.

28. However this fails to recognise that the contract may be automatically extended for

another 2 year term, and yet, within that 2 year term, be brought to an end by one month’s

notice, well before the expiration of that 2 year term. It cannot be therefore, as contended in

the Soyinka letter, that Clause 13 using the mandatory language “shall”, takes precedence

over clause 10, which uses the discretionary language “may”. Both clauses can coexist as

they deal with two separate situations, one termination, the other, extension after the original

period. In fact the contents of that letter are illogical and not based on actual law. The

reasoning in that letter is convoluted, unconvincing, illogical and unsupported as a matter of

language, far less of law. It certainly cannot provide any basis for ignoring a notice of

termination under Clause 10.

29. Despite the Soyinka letter, there is no technical omission or default or sleight of

contractual interpretation which somehow traps the defendant, despite the exercise of its

express contractual right to issue a notice of termination, into being bound, automatically, to

a further contractual term of two years, with an obligation to pay to the claimant over one and

a half million dollars.

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30. Clause 13(h) states that “…the contract shall be extended automatically for

successive periods of every two (2) years, unless either Party provides a notice of termination

at least one (1) month prior to the expiration of the existing term”.

31. Even the absence of a notice under clause 13, or service of an ineffective notice under

Clause 13 does not somehow invalidate the notice to terminate issued and served under

Clause 10. The effect of no notice or an ineffective notice under clause 13 is simply that the

contract is automatically extended, unless or until brought to end by a notice of termination

under clause 10. A notice to terminate sent within 1 month prior to the Contract’s expiration,

is still a notice within the definition of clause 10.

32. The effect of no notice or an ineffective notice under clause 13 could not be that the

contract continues for a further two year period without possibility of termination by notice

under Clause 10, entitling the claimant to claim for all profits that would have been obtained

over the entire 2 year period, regardless of whether or not a termination notice under clause

10 had been served. There is no language within this contract that could produce such a

commercially irrational result.

33. Further, the use of the vehicles after the notice to terminate expired could not equate

to an acceptance of the Notice being invalid as the minutes of the meeting between the parties

in May 2015 makes it perfectly clear that the original contract was not accepted as being in

force.

34. The basis of McKenzie’s rejection of the notice of termination is that Clause 13(h)

purportedly attaches a further requirement to the power to terminate by notice that the

prescribed 1 month’s notice (as per Clause 10 (a) must be given within an existing term and

at least 1 month prior to the date of automatic renewal. Here, the notice dated 8th October,

2014 failed to give 1 month’s prior notice to the date of automatic renewal on 1st November,

2014. Accordingly, McKenzie asserts that i. the notice was invalid and ii clause 13(h)

operated to renew the Contract for a period of 2 years from 1st November, 2014.

35. No basis has been provided to suggest that this could reflect the parties’ intentions (to

ignore clause 10 (a) after automatic renewal). Carried to its illogical conclusion this could

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even suggest that the contract, once renewed automatically could not be subject to

termination under clause 10 (a).

36. It was submitted that the aim of the interpretation exercise is to ascertain and give

effect to the objective intention of the parties which arises from the words of the agreement.

Lord Hoffman in Mannai Investment Co Ltd v Eagle Star Life [1997] 1 EGLR 57 stated

that:

“When, therefore, lawyers say that they are concerned, not with subjective

meaning but with the meaning of the language which the speaker has used, what

they mean is that they are concerned with what he would objectively have been

understood to mean. This involves examining not only the words and the

grammar but the background as well.”

37. Certainly nothing in the words, grammar or background supports this construction

which “attaches a requirement to the power to terminate.”

38. It was further submitted that where there are two or more possible interpretations of a

provision it was appropriate to adopt the interpretation most consistent with business

common sense in resolving the issue of what a reasonable person would have

understood the parties to have meant. It is not necessary to conclude that a particular

construction would produce an absurd or irrational result before having regard to business

common sense (see Rainy Sky SA and others v Kookmin Bank [2011] UKSC 50). See also

paragraphs 14 and 30

39. While this is accepted, business common sense or the commercial purpose of the

agreement does not favour the claimant’s self serving interpretation of the plain language and

effect of clause 10(a). Further, in this case, when the natural, logical and grammatical

meaning of the actual language used is considered, there are not two possible interpretations

which are of equal weight.

40. In this case the plain meaning of clause 10 (termination) as being independent of

clause 13 – (automatic renewal) does not lead to a conclusion that flouts business common

sense. In fact it is the tortured construction and imposition by the claimant of an unnecessary

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subjugation of clause 10 to clause 13, that produce an interpretation that flouts business

common sense.

41. This was emphasized by Lord Neuberger in Arnold v Britton [2015] UKSC 36,

where he stated:

“First, the reliance placed in some cases on commercial common sense and

surrounding circumstances (eg in Chartbrook, paras 16-26) should not be

invoked to undervalue the importance of the language of the provision … the

clearer the natural meaning the more difficult it is to justify departing from

it.” Paragraph 17

42. See also Trust Risk Group Spa v Amtrust Europe Ltd [2015] EWCA Civ 437

where Beatson J, citing previous authority – Johnson v Dean 2012 EWHC 2060 at 40

supported the view that “commercial common sense” should not be "elevated to an

overriding criterion of construction ... still less should the issue of construction be

determined by what seems like commercial common sense from the point of view of one of

the parties to the contract". Paragraph [64

43. In the present case the claimant’s interpretation is not supported by the language of

the provisions. In fact it does not even reflect commercial common sense.

44. It was submitted that there is no ambiguity in the meaning of the contractual

provisions which prescribe the requirements for terminating by notice. Either party has

the power to do so by Clause 10(a). This is obviously correct.

45. The claimant further submitted however that this provision does not include all of the

requirements for the valid exercise of the termination clause. However there is no basis for its

contention that the notice of termination served on it pursuant to Clause 10a was invalid, or

that it was therefore justified in ignoring it. The fact that it ignored it did not alter its status as

a valid notice of termination.

46. The claimant additionally submitted that “in construing the objective intention of the

Parties, the mandatory nature of the word ‘shall’ in Clause 13(h) points to an intention to

treat the provision as mandatory rather than merely discretionary. Accordingly, the provision

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creates an automatic renewal mechanism whereby the default position is that the contract

automatically rolls over for a further 2 years. The use of ‘unless’ creates an option which

allows the Parties to preclude the triggering of the automatic renewal, by taking certain

action – that is, the giving of notice of termination.”

“While the period of notice required in both Clause 10(a) and Clause 13(h) are the same (1

month), Clause 13(h) calls for something more. The 1 month notice period must also be at

least 1 month before the date of automatic renewal”.

47. However this fails to recognise or appreciate that a Clause 13 notice (to prevent

automatic renewal) is quite different from a Clause 10(a) notice (to terminate)

48. It was submitted further that:-

a. The objective intention of the Parties which arises from the clear and unambiguous

language in Clause 13(h) is that the Contract would automatically renew for a period of

2 years if the requisite notice was not given. This provision is mandatory.

This is accepted.

49. The claimant’s additional submission must be considered:-“The only reasonable

conclusion is that Clause 13(h) created a mandatory condition for valid notice that the

stipulated 1 month notice period must be 1 month prior to the date of automatic renewal. The

failure by Huawei to satisfy the mandatory requirement in Clause 13(h) resulted in the notice

being defective for its purpose. Accordingly, the Contract was not terminated and

automatically renewed on 1st November, 2014 for a period of 2 years.

50. This is only partially correct in relation to the failure to issue a Clause 13 notice.

However it completely fails to address the fact that a clause 10 notice was issued and served

which brought the contract to an end on November 8th 2014, regardless of its automatic

renewal. A clause 10 notice of termination is unaffected by clause 13 requirements which

apply only to a notice to prevent automatic renewal. There is no language in the contract, nor

any reasonable inference to be extracted there from, that supports the statement “The failure

by Huawei to satisfy the mandatory requirement in Clause 13(h) resulted in the notice being

defective for its purpose”, if that is intended to refer to the Clause 10 notice.

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51. The claimant submitted that Huawei, by its conduct and representations to McKenzie

after 8th November, 2014 demonstrated an intention to be bound by the Original Contract,

and suggested that the following points support this view:

a) Huawei received the letter from McKenzie’s then attorney dated 9th November,

2014 rejecting the Termination Letter and did not respond or otherwise address

McKenzie’s rejection. As such, Huawei was aware that McKenzie did not accept

the termination notice. …Further, despite this knowledge, Huawei never issued a

second letter of termination.

No authority was submitted for the startling proposition that a clause 10a notice

of termination by one party could be invalidated simply by a purported non

acceptance by the other party.

b) The claimant further submitted that after 8th November, 2014 Huawei continued

to make use of the said vehicles as before. McKenzie continued to send monthly

bills to Huawei, and Huawei’s witness contended that Huawei did not pay the

monthly rental bills because there was ‘uncertainty’.

52. This uncertainty was confirmed by examination of the documentation at the time.

a. termination notice;

b. request that the defendant rebid;

c. minutes of meeting of May 13th 2015;

d. submission of a new 2 month vehicle rental agreement on November 12th 2014.

53. All of these make clear that H definitely did not accept that the original contract

remained in effect.

54. The claimant submitted and recognised that” the Parties clearly intended the Minutes

to have contractual force”. Those minutes speak clearly for themselves.

55. On 13th May 2015, a meeting was held at which it was agreed:

“Huawei will seek approval to acknowledge that the original contract ending

2016 is in effect. This means that except that the amendment to the Agreement

dated January 2nd 2014 will apply until the expiration date October 2014.

Thereafter, the original contract prices will apply to the end of 2016.

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If the decision is granted to keep the original contract in effect, Huawei agrees

that should they wish to amend the original contract, they will give notice as

stated in the contract.

Once the confirmation from Huawei to this agreement is received in writing, Mc

Kenzie will generate invoices reflecting the outstanding sums for the rental of the

vehicles beginning November 2014 until April 2015 under the original contract

prices and Huawei will pay within 14 calendar days after receipt and acceptance

of the invoices.

Huawei agreed to pay the costs of repairs to the vehicles, once invoices are sent

by Mc Kenzie and approved by Huawei and Mc Kenzie”.

56. The minutes confirm that the Defendant:-

a. was seeking to resolve the matter, accepting that it had to pay for the vehicles being

used.

b. was seeking to resolve the issue of payment for the vehicles being used.

c. was seeking to resolve outstanding issues with respect to cost of repairs.

d. was making clear that it did not consider itself bound by the terminated contract, and in

particular by any long term contractual commitment to the claimant, including a two year

term after November 2014, unless or until its head office had considered and approved this

course.

57. In fact even if the claimant is correct as to the effect of the defendant having paid for

the use of vehicles for the period November 2014 to April 2015 this would not entitle it to

damages based on loss of profit for 18 months in light of Clause 10 which entitles either party

to terminate on providing 30 days notice.

58. Huawei eventually paid the monthly rental sums for the months of November 2014 to

May 2015 in accordance with the rates of the Contract. However this does not necessarily

mandate that it thereby affirmed the effectiveness of the Original Contract. It merely used the

mechanism and rates from that previous dealing between the parties without wholesale

adoption and incorporation of all its remaining terms. It was at pains at all times to point this

out in its correspondence and in its meeting of May 2015.

59. In fact on 10th July, 2015 Huawei told McKenzie that:

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(i) McKenzie’s vehicles rental services would no longer be required; and

(ii) Huawei had found an alternative supplier.

60. In fact the letter from the defendant dated May 18th 2015:

a. makes it clear that its payment for car rental services from November 2014 to May 2015

was final full payment

b. did NOT indicate that it had yet received approval to acknowledge that the contract

continued in existence and ended in 2016, and there is nothing in the letter, in writing or by

inference, to indicate that it was now prepared to acknowledge or override its earlier

termination.

61. This was consistent with its earlier termination of the contract and non continuation or

reinstatement thereof as recognised by the Minutes of the May 2015 meeting.

The repairs

62. The vehicles had suffered damage while in the custody of the Defendant. Damage

reports were completed and signed by both parties. Each damage report stated (in bold):

“Note: Both parties, McKenzie and Huawei, must agree on the price/cost for the

repair of the vehicles, before the repairs are done. Otherwise, Huawei will not

recognize the cost incurred nor pay for the repairs. The agreement must be in

writing and signed by both parties”.

63. This was clearly not done. If it had there would be no need for the claim for repairs as

the cost of repairs would have been not only agreed, but the agreement would have been in

writing and signed by both parties. No party could then challenge the reasonableness of the

cost of claimed repairs in that context. Instead at trial there was no evidence that payment had

been made for the claimed or invoiced cost of repairs, or even that the repairs had been

effected, or paid for at the invoiced rate. Even though it was not essential that the repairs

had actually been carried out, if they had and been paid for at the invoiced rate that might

have gone a long way toward establishing that the claimed, invoiced cost of repair by the

claimant was the bona fide reasonable cost of repair.

64. Even if the repairs were not effected, supporting documentation as requested could

have been provided as identified below. This was not done despite the letter in response to

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the Pre action Protocol letter dated July 28th 2015 requesting this information before the

claim form was filed.

65. On 28th July 2015, the Defendant responded to the Claimant’s pre-action

protocol and referring to the agreement of 13th May 2015 stated:

“…Huawei has sent communications… requesting to McKenzie to provide the

quotations and/or payments made related to the repairs as supporting

documentation and proof of payment”.

66. That request, like the notice of termination, was ignored. In July McKenzie invoices

were supplied, allegedly for repairs. These had not been approved by both parties, and in fact

there was no basis for concluding from these self generated invoices, whether the repairs had

been effected, or at what actual cost. In fact when invoices were eventually supplied from

Glen’s it became clear that a. Mackenzie was not the party who would be effecting/had

effected the repairs, and b. that Mackenzie invoices were the figures in the Glens invoices for

the same alleged repairs in addition to 15 % Value added tax.

67. However, suspiciously, the invoices, without any further documentation, quotation,

estimate, pro forma invoices for parts allegedly required, or invoices or bills for parts actually

used if repairs were actually effected, were not supplied, and no attempt was made to have

such material available to the court. This was despite the clear and consistent indications

from the defendant of its willingness to meet the reasonable cost of repairs if such supporting

documentation were to be supplied. This was agreed to at the meeting of May 13th 2015 but it

was made clear that its willingness was predicated upon its being satisfied of the

reasonableness of the claims. Yet the claimant immediately tried to evade that agreement and

the mechanism agreed at that meeting, coming instead to court without documentation

supporting the alleged invoices, save for a cash bill for an engine.

68. In the witness statement of Mr. Seegobin invoices from “Glen’s Auto Repairs” were

attached. These, like the self generated Mckenzie invoices, are invoices. They are not

receipts for payment. There is nothing to indicate that they have been paid. Glen or

representatives did not attend to verify that work was even carried out pursuant to these

invoices, or that the amounts invoiced were ever paid, or, more importantly that those

amounts were reasonable. Further no purchase orders for parts allegedly required were ever

Page 18 of 23

supplied either to the defendant or to the court. In fact , save for cash bill for an engine in the

sum of $34,000.00, which formed the basis of Mckenzie invoice 01 dated July 21st 2015 in

the sum of $40,000.00, no further documents were supplied to substantiate either the actual

or, even if not yet effected, the reasonable cost of either parts or labour.

69. Huawei has not agreed the cost of the repairs. The Defendant called upon the

Claimant to provide supporting documentation, proof of payment and quotations. The

Claimant did not respond save to issue a claim in the High Court 3 days later.

70. At this point in time therefore, suspiciously, there is no satisfactory evidence that the

claimed, invoiced, cost of alleged repairs is bona fide, despite the mechanism established to

avoid exactly this situation, and despite several opportunities being provided for the

claimant to satisfy either the defendant, and then the court, that it actually did carry out

repairs to vehicles, or that its claim for those repairs is fair and reasonable. See Coles v

Hetherton [2014] 3 All ER 377 where it was held (and upheld on appeal):-

Held - (1) Where a vehicle was damaged as a result of negligence and was

reasonably repaired (rather than written off) the measure of the claimant's loss that

resulted from the damage inflicted by the tortfeasor was the diminution in value of

the vehicle; the reasonable cost of repair could generally be taken as representing

that diminution in value. Authority established that where a chattel was damaged by

the negligence of another that loss--the 'direct' loss--was suffered as soon as the

chattel was damaged. The proper measure of that loss was the diminution in value

that the chattel had suffered as a result of the negligence of the defendant. If the

chattel could be economically repaired, the claimant was entitled to have it repaired

at the cost of the wrongdoer, although a claimant was not obliged to repair the

chattel to recover the direct loss suffered. Events occurring after the infliction of the

damage were irrelevant to calculating the diminution in value measure of damages.

The practical way that that diminution in value was generally calculated was to ask

how much would be the reasonable cost of repair so as to put the chattel back in the

state it was in before it was damaged; that was a convenient practice which the

courts should continue to follow. Only if the sum claimed appeared to be clearly

excessive would the court be justified in investigating whether that sum exceeded the

cost that a claimant would have incurred in having the repairs carried out by a

reputable repairer. The correct analysis of a claim for diminution in value, even if it

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was measured by the reasonable cost of repairs, was that it was a claim for general

damages. The argument that the claimants in the instant cases could not recover the

full cost of repair to RSAI because they were obliged to mitigate their loss by having

the repairs done at a lower cost was wrong because mitigation was not relevant in

respect of that 'direct' loss; such loss could not be 'mitigated' by having the chattel

repaired at a lower cost because what constituted the loss was the diminution in value

of the chattel not the cost of the repairs. Thus, if a claimant whose damaged chattel

was capable of economic repair chose to repair it at a cost which was not

reasonable, the reason why he could not recover that unreasonable cost as damages

would be because the cost did not represent the diminution in value of the chattel.

What the diminution in value of a chattel or the 'reasonable cost of repair' was,

would always be a question of fact for the trial judge to determine if it were in

dispute (see [27]-[29], [31]-[33], below);

71. Despite every opportunity to do so the Claimant has not strictly proven any specific

quantified alleged loss resulting from the need for repairs save for the invoice for $40,000.00

supported by the cash bill for $34,000.00 (to which it added a small mark up and then value

added tax to produce the rounded figure of $40,000.00).

72. The Claimant submitted that the Defendant cannot rely on any agreement to agree to

the cost of the repairs before they were performed since (1) it is too uncertain, (2) such an

agreement is subject to negotiation and (3) there is no contract. It goes without saying that

this is clearly wrong. The agreement recorded in the Minutes of the meeting is clear. The

defendant would pay the cost of repairs provided that the cost of repairs was first

communicated to it for its approval. Its position on this was consistent throughout.

73. It is clear that the reason for this must have been to avoid surprises from exaggerated

and inflated claims for cost of repairs. It wanted to know beforehand what these costs were

and to have input into assessing the reasonableness of any estimates for repair before the

repairs were effected and the claims for such costs were submitted to it as a fait accompli.

There is nothing uncertain about this. There was a clear understanding which the claimant

repeatedly ignored:

a. By issuing a pre-action protocol letter claiming the alleged costs of repair before even

submitting invoices.

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b. By ignoring the request of the defendant when it received the pre action protocol letter

that it provide documents, estimates or evidence that it had actually paid for these

repairs, if it had done so.

c. By issuing its claim without these documents or any documents that establish, even to

this day, the reasonableness of its claim for repairs.

76. The invoices from Glens, unsubstantiated by any material in support such as invoices

or pro forma invoices for parts required still do not suffice as proof of the reasonable cost of

repair. In any event the failure to supply such material, and extreme reluctance manifested by

the claimant in complying with its agreement that it would substantiate the cost of repair, (or

at least provide the opportunity for the defendant to assess those costs) before they were

allegedly incurred, is highly suspicious.

77. Even more suspicious is the fact that the invoices originally submitted to the claimant,

even though not preapproved in accordance with the agreement between the parties, were all

invoices from Mackenzie Rentals. Those self-generated documents were without supporting

material to establish either:

a. that the repairs were actually effected, or

b. that the cost of repairs claimed was based on a reasonable estimate of those costs.

The submission of invoices, from “Glens”, without further supporting documentation, does

not advance that position.

78. The quantum of those costs has not been strictly proved, especially in light of that

reluctance to comply with its agreement to refrain from doing precisely what it now seeks to

do – submit a claim for cost of alleged repairs in respect of which the defendant has not had

an opportunity to assess its reasonableness. It was a situation foreseen and addressed by

agreement between the parties. Yet, inexplicably the claimant completely ignored that

agreement and now seeks to assert, in explanation, that the agreement that it entered into was

void for uncertainty.

79. While the Defendant is liable to pay the Claimant a reasonable price in relation to the

repairs there is no evidence from the claimant that the invoices provided to the Defendant

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are a reflection of the actual diminution in value of its assets, or that they reflect the

reasonable cost for such repairs, given its continued evasion of requests, even to this date, to

provide such material in its possession to substantiate the cost of repairs and demonstrate the

reasonableness thereof.

80. Even if the sums were not expended the claimant had a duty to proof its claim

strictly and establish that the cost of repairs claimed was genuine. This would not

have been that difficult to do. For example if the cost of installing a part is being

claimed then a document , pro forma invoice for such part, or invoice if actually

purchased, could have been obtained and supplied to the defendant or the court. In

fact this was done with respect to an engine for which a cash bill was supplied. The

cost of this, invoiced by the claimant, will be allowed.

81. A labour cost associated with the repairs and some basis for its charge could

have been supplied. To simply submit invoices and demand payment, in violation of

an express agreement that this would not be done, especially when the supporting

documentation requested should not have been difficult to procure, renders this claim

suspect. These principles are well established in local jurisprudence. See for example

decision of the Court of Appeal in David Sookoo, Auchin Sookoo v Ramnarace

Ramdath Cv. App No. 43 of 1998 per M.A de la Bastide, C.J, delivered 12th January

2001, it was confirmed that that degree of flexibility had limits, depending on inter

alia:-

(i) The circumstances,

(ii) The nature of the claim,

(iii) The difficulty or ease with which proper evidence of value might be obtained, and

(iv) The value of the item involved.

“It is common experience that items of special damage are sometimes not proved to

the hilt and yet the Court may make an award in respect of them. It is a matter which

depends on the circumstances and evidence in each case. The Court has to decide

whether on the material before it, it can arrive at some acceptable conclusion as to

the amount which it should award.” (At page 4)

“…..These are the cases on which counsel for the Respondent relies. The sort of

evidence which a Court should insist on having before venturing to quantify damages

will vary according to the nature of the item in respect of which the claim is made

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and the difficulty or ease with which proper evidence of value might be obtained. It

would also, depend in part on the value of the individual item. It may not be

reasonable to require expert evidence of the value of used household items but where

one is dealing with a motor-vehicle which usually has considerable value, and in

respect of which there should be no difficulty in securing proper evidence of value,

then the Court is entitled to adopt a more stringent approach.

I, accept the correctness of the decision in Grant’s case but that case is clearly

distinguishable on the facts from ours”. (At page 5)

82. See also the discussion on proof of special damages by the Honourable Justice of

Appeal Archie as he then was at pages 8 to 11 of the case of Civ. App. No. 20 of 2002 Anand

Rampersad v. Willie’s Ice Cream Limited – applying all of the above cases – as follows:-

At page 8 – “I wish to emphasise that the fact that a defendant may not challenge the

values of destroyed items given by the plaintiff does not automatically entitle the

plaintiff to recover whatever is claimed. The rule is that the plaintiff must prove his

loss”.

At page 10 – “None of the latter three cases should be understood as derogating in

any way from the principle that the plaintiff must prove any special damages claimed.

In particular, Uris grant, which may appear to bear some similarity to the present

case, is merely an example of a case where the degree of particularity accepted by the

Court of Appeal was considered to be appropriate in those special circumstances. In

this case the Plaintiff/Respondent is a commercial enterprise. It would have been

reasonable to expect that some evidence of the value of the larger items could be

found in its books and records.”

At page 10 –“ a lesser degree of strictness would apply to proof of the value of

smaller items such as kettles, mops (etc .In accordance with Uris Grant the Master, in

the absence of any evidence to the contrary, would have been entitled to accept a

reasonable figure”.

At page 10-11 “the plaintiff cannot simply present a list of prices, it must show the

basis on which the figures are established” (all emphasis added)

Conclusion

83. a. The contract executed on May 1st 2013 was lawfully terminated in accordance

with Clause 10(a) thereof by the issue of a notice pursuant thereto.

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b. The parties never agreed on the cost of repairs and the claimant has to date

continuously ignored the further agreement at the meeting of May 13th 2015 that the

mechanism for reimbursement must involve prior approval of those costs by the defendant

and the claimant.

c. The claimant has not sufficiently proved the quantum of the reasonable cost of repairs,

whether effected or not.

Disposition

84. The claimant’s claim for damages for breach of contract must therefore be dismissed,

with costs to be paid by it.

a. The claimant in the circumstances can recover only $40,000.00 as damages in respect of

its largely unproven claim for repairs, the majority of which are not substantiated or strictly

proved.

Orders

85.

i. The claimant’s claim for damages for breach of contract is dismissed.

ii. The claimant is to pay to the defendant costs on the basis of its claim in the sum of

$1,500,750.00 for damages for breach of contract calculated as prescribed by the Civil

Proceedings Rules in the sum of $134,037.50.

iii. The defendant is to pay to the claimant the sum of $40,000.00 as damages in respect of

the cost of repairs to be set off against the costs payable by the claimant to the defendant.

Dated the 7th day of March, 2016

Peter A. Rajkumar

Judge

The Court is indebted to counsel for all parties for the diligence of their research and the thoroughness and detail

of their written submissions and to Judicial Research Counsel E. Ali for her contribution to the judgement.