Saffron Ltd v Angel Estates Ltd

• Jurisdiction: Antigua and Barbuda
• Judge: Baptiste JA
• Judgment Date: 01 February 2019
• Judgment citation (vLex): [2019] ECSC J0201-1
• Docket Number: ANUHCVAP2012/0045
• Court: Court of Appeal (Antigua and Barbuda)
• Date: 01 February 2019

[2019] ECSC J0201-1

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Mr. Davidson Kelvin Baptiste Chief Justice [Ag.]

The Hon. Mr. Mario Michel Justice of Appeal

The Hon. Mde. Gertel Thom Justice of Appeal

ANUHCVAP2012/0045

Between:

Saffron Limited

Appellant

and

Angel Estates Limited

Respondent

Appearances:

Dr. David Dorsett for the Appellant

Mr. John Fuller for the Respondent

Civil appeal — Assessment of damages — Mitigation of damage — Whether learned judge erred in finding that the appellant failed to mitigate its losses — Requirements of rule 10.7 of the Civil Procedure Rules 2000 — Whether Court should interfere with findings of fact of the trial judge — Loss of profit — Appellate interference with an award of damages

The appellant, Saffron Limited (“Saffron”), operated a restaurant on part of a premises leased by the respondent, Angel Estates Limited (“Angel”). The 21-year lease agreement dated 2 ^nd October 2006 was due to expire in October 2027. The lease provided that Saffron would pay for the electricity consumed, which was supplied by the Antigua Public Utility Authority (“APUA”). Saffron complied with this term of the lease. However, on or about 21 ^st October 2008, APUA discontinued the supply of electricity to Angel's premises because of Angel's non-payment.

Saffron claimed against Angel for breach of its contractual obligation under the lease agreement to provide electricity to the premises. Saffron claimed damages for breach of contract and special damages representing loss of profits until the end of the term of the lease in 2027, severance pay and the costs of return flights to India for two chefs. Saffron obtained default judgment. By a consent order, the default judgment was subsequently set aside and judgment was entered for Saffron with damages to be assessed.

At the assessment of damages, the issue of mitigation arose. Angel argued, inter alia, that Saffron failed or refused to mitigate its loss by connecting to the Caribbean Development (Antigua) Limited (“CDAL”) power supply. The learned judge found that Saffron did not do all that it reasonably could to stay in business and took no steps to mitigate its loss, as Saffron made no attempt to find alternative premises or to obtain an alternative power source by way of purchase or lease of a generator to keep its restaurant open. Damages were assessed and Saffron was awarded $54,000.00 in general damages and special damages of $188,762.83.

Saffron, being dissatisfied with the learned judge's assessment, appealed. Saffron's grounds of appeal raise the following issues: (i) whether the learned judge erred in holding that Saffron failed to mitigate its loss by failing to seek an alternative venue, as no such allegation or factual argument had been set out in Angel's defence; (ii) whether the learned judge erred in holding that the renting or purchasing of a generator to provide electricity was an alternative available to Saffron by failing to have regard or proper regard to section 5 of the Public Utilities Act and the interest of the APUA; (iii) whether the judge erred in holding that the question of whether spending $200,000.00 to connect Saffron to an alternative power source would have exposed it to financial risk did not arise, when the issue of whether Saffron was under a duty to undertake financial risk in order to connect to CDAL was a live one; (iv) whether the judge erred in disallowing Saffron's claim for special damages for loss of profit; (v) whether the judge erred in disallowing Saffron's claim of special damages for severance pay to the workers together with the costs of repatriating Saffron's two chefs to India; and (vi) whether the sum of US$20,000.00 awarded as general damages for breach of contract is adequate.

Held: allowing the appeal in part; awarding 5% of the prescribed costs in the court below and two-thirds of that sum on appeal to Saffron, that:

• 1. Rule 10.7 of the Civil Procedure Rules 2000 (“CPR 2000”) provides that a defendant who wishes to raise the allegation or factual argument on the issue of mitigation must plead it in his defence. A failure to so plead is not necessarily fatal to his ability to advance the issue. The allegation or factual argument with respect to mitigation can be raised otherwise than in the defence with the permission of the court or agreement of the parties. In this case, a consent order was entered between the parties which provided the requisite agreement pursuant to which Angel could have adduced and did adduce affidavit evidence with respect to the issue of mitigation.

  Rule 10.7 of the Civil Procedure Rules 2000 applied; Calix v The Attorney General of Trinidad and Tobago [2013] UKPC 15 considered; Geest plc v Lansiquot [2002] UKPC 48 considered; Townsend v Persistent Holdings [2008] UKPC 15 considered.

• 2. The duty to mitigate is a duty not to expose a contract breaker or tortfeasor to additional expense by reason of the claimants not doing what they ought reasonably to have done. That principle is qualified for it does not impose an obligation to take any step which a reasonable and prudent man would not ordinarily take in the course of his business. There is no evidence before the Court that Saffron even attempted to obtain alternative premises; that the premises occupied by Saffron had a distinctive feature which no other premises could provide, or that the ambience could not be duplicated elsewhere.

• 3. There is no evidence of any request being made to APUA for Saffron to use a generator to supply its own electricity. Further, Saffron could have exhausted the available options of leasing alternative premises or connecting to CDAL before resorting to the drastic measure of closing its business. Section 5(2) of the Public Utilities Act allows APUA to give written permission to any person to generate or supply electricity at any place in Antigua and Barbuda. In the circumstances, requesting such permission was certainly an option available to Saffron under section 5(2) of the Act and Saffron failed to mitigate its losses by so doing.

  Section 5(2) of the Public Utilities Act Cap. 359, Revised Laws of Antigua and Barbuda 1992 considered.

• 4. The learned judge's finding on the question of financial risk was clearly predicated upon the absence of evidence. The judge considered Saffron's response to Angel's breach of contract and found that there was no evidence that Saffron would have to expend $200,000.00 to connect to the CDAL. Having so found, the learned judge was entitled to conclude that the issue of whether or not expending that sum would expose Saffron to financial risk, simply did not arise.

• 5. Saffron's claim for special damages for loss of profit is unsustainable due to its failure to take reasonable steps to mitigate its loss.

• 6. Section C40 of the Antigua and Barbuda Labour Code (the “Labour Code”) provides for the entitlement to severance pay. Although it is necessary to plead and prove special damage with proper particularity, the amount of the severance pay has been prima facie established. Further, there does not appear to be any challenge to the entitlement to the severance payment. Additionally, severance pay is liable to be paid as a matter of law having regard to the provisions of section C40 of the Labour Code. The learned judge should therefore have allowed Saffron's claim for special damages for severance pay. The claim for special damages in respect of the cost of the repatriation of the chefs to India is unsustainable, on the basis that no evidence was adduced in support of that item.

  Section C40 of the Antigua and Barbuda Labour Code Cap.27, Revised Laws of Antigua and Barbuda 1992; Perestrello E Companhia Limitada v United Paint Co. Ltd. [1969] 1 WLR 570 considered; Grant v Motilal Moonan Ltd and Another (1988) 43 WIR 372 applied.

• 7. There is no all-embracing principle governing the assessment of general damages other than that an award must be of such amount as will fairly compensate the claimant for his loss. Given the principles governing appellate interference with an award of damages, it has not been demonstrated that this is an appropriate case warranting such intervention. Taking issue with the judge's assessment of the evidence is hardly a promising start or basis for disturbing the award of general damages. In this case, there is no proper basis for disturbing the award of general damages.

  West Midlands Travel Ltd v Aviva Insurance UK Ltd [2013] EWCA Civ 887 applied; Flint v Lovell [1935] 1 KB 354 applied; Nance v British Columbia Electric Railway Co. Ltd [1951] AC 601 applied.

Baptiste JA

1 Saffron Limited (“Saffron”) appeals the order of Remy J [Ag.] upon an assessment of damages for breach of contract. The background facts are that Saffron operated a restaurant on a part of premises leased by Angel Estates limited (“Angel”) under a 21-year lease agreement dated 2 ^nd October 2006. The lease was due to expire in October 2027. It was a term of the lease that Saffron would pay for electricity consumed. The electricity was supplied by the Antigua Public Utility Authority (“APUA”). Saffron complied with this term of the lease. However, on or about 21 ^st October 2008, APUA discontinued the supply of electricity to Angel's premises, part of which was leased to Saffron, on account of Angel's non-payment.

2 In April 2009, Saffron instituted a claim against Angel for breach of its contractual obligation under the lease agreement to provide electricity to the premises. Saffron claimed damages for breach of contract and special damages, amounting to EC$15,190,031.95. This included $14,658,300.00 for loss of profits until the end of the term of the lease in 2027 and EC$178,524.85 as severance pay and costs of return flights to India for two chefs, EC$30,592.86 representing the total amount of severance pay. Saffron obtained default judgment on 15 ^th August...