Frank's International Trinidad Ltd v Operational Support Services Company Ltd
| Jurisdiction | Trinidad & Tobago |
| Judge | Harris, J. |
| Judgment Date | 04 October 2012 |
| Neutral Citation | TT 2012 HC 316 |
| Docket Number | HCA No. 546 of 2001 |
| Court | High Court (Trinidad and Tobago) |
| Date | 04 October 2012 |
High Court
Harris, J.
HCA No. 546 of 2001
Mr. Kendell S. Alexander instructed by Aisha Donawa for the claimant.
Mr. Faarees Hosein for the defendant.
Contract Terms - Whether course of dealings constituted an implied term.
The claimant, Frank's International Trinidad Ltd. (“Franks TT”), is a limited liability company duly registered in Trinidad and Tobago pursuant to the Companies' Act of Trinidad and Tobago, Chap. 88:01. The defendant, Operational Support Services Company Ltd. (“OSS”) is also a limited liability company duly incorporated and registered in Trinidad and Tobago pursuant to the Companies' Act of Trinidad and Tobago. Frank's International Incorporated (“Franks Int.”) is a separate corporate entity duly incorporated in the United States of America, with its registered office situated at 9821 Katy Freeway, Suite 1000, Houston, Texas, 77024. Frank's International Incorporated (Frank's Int.) is also the majority shareholder in Frank's International Trinidad Ltd. (“Franks TT”).
The claimant (Franks TT) and defendant (OSS) entered into a contract for the supply or hire of certain equipment in Trinidad and Tobago. Pursuant to the said contract the defendant obtained the claimant's services on the basis of seven agreements between August 7th 1999 and June 1st 2000 for which it was invoiced. However, the defendant failed to satisfy any of the said invoices. As a result, the claimant is now seeking to recover the sum of $632,920.55 being the principal sum together with interest due and owing by the defendant as at 28th February 2001.
This claim is brought by the claimant against the defendant for the sum of $632,920.55 being the balance of principal monies and interest due under 7 agreements for hire and related services made between the claimant and the defendant dated 7th August 1999, 11th February 2000, and 1st June 2000.
The defendant raises as its Defence that it is entitled to a set off of monies due and owing to it by the plaintiff and its related companies/divisions which right of set off has arisen as a consequence of a course of dealings and/or conduct giving rise to the right of set off and estoppels between the defendant and the controlling shareholder of the claimant, Frank's International Inc (“Frank's Int.”).
The claimant has led evidence in support of its claim from Sharon Mohammed, its Chief Accountant. She was not employed by the claimant in any capacity at the time of the matters pleaded in the Defence and gave evidence from the documents provided to her which are the subject of the claim.
The defendant gave evidence through, Larry French, its director who had firsthand knowledge of and was the principal person who had dealings with Frank's International Inc. had dealings in respect of the relationship between the two parties. The documents in evidence include the following:
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(a) Frank's International Inc's brochure which describes itself as a “multinational company” and identifies all of the countries throughout the world in which it conducted its operations including Trinidad and Tobago and the claimant is named — L.F. 1;
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(b) the agency agreement dated 2rld February 1995 between the Hong Kong Company, a division of Frank's International Inc. and the defendant — L.F. 2;
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(c) the fax dated 3 February 1998 from Frank's International Inc. to the defendant with respect to Bahrain operations carried out by the Dubai division — L.F. 3;
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(d) the fax dated 30 July 1998 from Frank's International Inc. to Larry French of the defendant with respect to the assignment of funds due to the defendant to the Hong Kong Division of Frank's International Inc. — L.F. 5;
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(e) the letter dated 24 September, 1999 from Frank's International Inc. to the defendant regarding the reconciliation of account and the attached reconciliation — L.F. 6;
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(f) the fax dated 5 December 1999 from Frank's International Inc. to the defendant regarding the reconciliation of the defendant's account with the Frank's International group-L.F. 8;
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(g) The OSS invoices; and
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(h) The OSS reconciliation accounts.
The claimant submits that this claim is based strictly on an agreement or contract between the claimant and the defendant, to which Frank's International Inc. and/or Frank's Dubai, as separate legal entities, are not a party to. The claimant and defendant contracted for the supply of equipment, a service to be provided by the claimant to the defendant. The claimant performed the said contract and invoiced the defendant for the services rendered. However, the defendant has failed to satisfy those invoices and rather, contends that it has set off the sums due and owing on account of a course of dealing that existed between itself, OSS, and Frank's International Inc. and Frank's Dubai.
The defendant is relying on the alleged course of dealing between the defendant and Frank's International Inc. and Frank's Dubai to establish that there was a implied term in the said contract that permits it to set off the sums due and owing to the claimant against sums due and owing by it to Frank's International Inc. and Frank's Dubai. The claimant submits that at common law it settled that in commercial transactions extrinsic evidence of custom and usage is admissible to annex incidents to written contracts in matters with respect to which the contracts are silent. Furthermore, they contend, a Court may import into a contract any local custom or usage which is notorious, certain, legal and reasonable, provided that it can be shown that the custom or usage normally govern the particular type of contract in question, In those circumstances, the custom or usage would be regarded as part of that contract in precisely the same manner as if it had been expressly agreed between the parties.
The claimant submits further, that where it is not possible to show custom and usage that may be imported into a contract of the particular type before the Court, it may be possible to import the term on the basis of previous course of dealings between the parties. One authority they suggest as instructive, is British Crane Hire v. Ipswich Plant Hire (C.A.) [1975] 1 Q.B. 303. That case concerned an oral agreement to hire plant equipment whereby the defendant hired cranes from the claimant. Further to which on a printed form the claimant set out the terms and conditions of the hire. There were two previous transactions between the claimant and the defendant many months before to which the defendant's manager was unaware. However, Lord Denning, M.R. found that those circumstances were insufficient to show a course of dealings. Lord Denning held that the parties were both in the trade and were of equal bargaining power, whereby each was a firm of plant hirers who hired our plant. Therefore, the defendants knew of the firms in the plant-hiring trade always imposed conditions in regard to the hiring of plant and their conditions were on much the same lines. He held that in the circumstances the condition on the form should be regarded as incorporated into the contract because the evidence was clear that both parties knew quite well that conditions were habitually imposed by the supplier of the machines and the substance of those conditions.
While, in British Crane Hire v. Ipswich Plant Hire the Court did not incorporate the implied terms of the contract solely on the course of dealing, the claimant suggests that it is instructive because it elucidates the fact that the course of dealing should exist between the parties to the contract and the parties should have knowledge of and an understanding of the implications of course of dealings to be incorporate. The claimant here contends that case can be distinguished from the present case because it is clear from the evidence that the course of dealing on which the defendant is seeking to rely is not between the claimant and the defendant. Rather it exists between the defendant and third parties who are not party to the contract with the claimant. Secondly, the defendant has not established that the claimant had knowledge of any course of dealings particularly as it regards the setting-off the debts and its implication on the claimant. Therefore, the claimant submits that the course of dealings between the defendant and Frank's International Inc. and Frank's Dubai cannot be incorporated into the oral agreement between the claimant and the defendant.
The claimant submits that the doctrine of the privity of contract arises whereby the defendant contends that on account of the course of dealing between it and Frank's International Inc. and other subsidiaries it is entitled to set off the sums due and owing to claimant against sums due and owing to Frank's International Inc. and/or its other subsidiaries. The doctrine of privity of contract prescribes that the contract between the claimant and defendant cannot confer a benefit on either Frank's International Inc. or Frank's Dubai. Likewise, the contract between the defendant and Frank's International Inc. and Frank's Dubai cannot confer a burden on the claimant because the claimant is not party to that contract. However, it is the defendant position that on account of the course of dealings between the defendant and Frank's International Inc. and the weighted relationship between Franks Int. and Franks TT, the practice of set off debts was an implied term of the contract between the claimant and the defendant.
The claimant's submissions continue; it is a general rule that a contract cannot confer a benefit or impose a burden on a stranger to it, being persons who are not parties to it. In this case, the agreement or dealing between the defendant, Frank's International Inc. and Frank's Dubai imposes a burden or...
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