Water and Sewerage Authority of Trinidad and Tobago v Waterworks Ltd

• Jurisdiction: Trinidad & Tobago
• Judge: Peter A. Rajkumar JA,Smith JA
• Judgment Date: 26 June 2020
• Neutral Citation: TT 2020 CA 30
• Court: Court of Appeal (Trinidad and Tobago)
• Docket Number: Civil Appeal P151 of 2014
• Date: 26 June 2020

IN THE COURT OF APPEAL

Panel:

A. Mendonça JA

G. Smith JA

P.A. Rajkumar JA

Civil Appeal P151 of 2014

CV 2010-03594

Between

Water and Sewerage Authority of Trinidad and Tobago

Appellant

and

Waterworks Limited

Respondent

Appearances:

Mr. Reginald T.A Armour SC, Mr. Raphael Ajodhia and Ms. Elena Araujo for the Appellant

Mr. Stanley I. Marcus S.C, Ms. Debra W.C. James for the Respondent

I have read the judgment of Rajkumar JA and I agree.

Allan Mendonça

Justice of Appeal

Table of Contents

	Page Number
Background	5
The Claims	5
Loss of Profits	5
Issues	6
Conclusion
Issue I – Claim under sub-clause 19.6(a) – value of work done	7
Issues ii and iii – Claims under sub—clause 19.6 (c)	8
Purchase orders premature	8
Whether evidence that the purchase orders were for actual supply of equipment	10
Orders	12
Analysis	14
Deductibility of advance payments
Reviewing findings of fact by the trial judge	14
Claims under sub-clause 19.6 (c) —
Costs or liability which in the circumstances were reasonably incurred by the contractor in the expectation of completing the works	16
Evidence that purchase orders were premature	18
Whether purchase orders were not in fact for actual supply of equipment	21
Contractual provisions	23
whether any reasonable basis for cancellation charges even if purchase orders were not for actual supply of equipment	24
Whether the instant purchase orders could have been a logical or reasonable mechanism for locking in prices	24
Whether the preliminary designs on which the quotations and purchase orders were based were sufficiently detailed to allow equipment to be identified and ordered	25
Changes to the equipment in the quotations	30
Interpretation of contractual provisions
Evidence to contradict terms of quotations and purchase orders inadmissible	32
Language of the contract	34
Evidence of subjective intention — Alleged industry practice	34
Commercial Common Sense	35
Orders	36
Judgement of Smith JA	38–44

Delivered by Peter A. Rajkumar JA

Peter A. Rajkumar JA

1 The Appellant and the Respondent entered into two contracts for the design and construction of two water treatment plants, one at Matura and the other at Yarra, (hereinafter individually referred to as “the Matura contract” and “the Yarra contract” respectively and together as “the contracts”). The respondent's bid under the Matura contract was accepted on 27 ^th September 2006. Its bid under the Yarra contract was accepted by letter dated 3 ^rd April 2007. The contracts were subsequently terminated. The Yarra contract was terminated on or around 24 ^th June 2009. In the case of the Matura contract notice of termination was given on or about 11 ^th September 2009 and the termination was confirmed by letter dated 12 ^th October 2009.

2 The contracts provided for termination before completion pursuant to sub clause 15.5 of the General Conditions of Contract. This clause permitted termination by the appellant at any time for its convenience upon notice, and for the Respondent to receive payments in accordance with sub clause 19.6, of which sub clauses 19.6(a) and (c) are relevant.

3 Sub-clause 19.6 of the General Conditions of Contract (sub clause 19.6) provides, inter alia (all emphasis added):

• i. “…upon such termination the Engineer shall determine the value of the work done and issue a Payment Certificate which shall include:

  • a. the amounts payable for any work carried out for which a price is stated in the contract;

  • c. any other Cost or liability which in the circumstances was reasonably incurred by the Contractor in the expectation of completing the Works;

Background The Claims

4 Pursuant to that clause the Respondent claimed in respect of the Matura contract:

• i. The sum of $1,497,413.00 representing the value of work done under sub clause 19.6 (a);

• ii. $4,619,028.30 representing a liability reasonably incurred under sub clause 19.6 (c);

• iii. The sum of $4,420.931.17 representing anticipated loss of profit.

5 In respect of the Yarra Contract the Respondent claimed:

• i. The sum of $651,411.60 representing the value of work done under sub clause 19.6 (a);

• ii. The sum of $3,577,942.46 representing charges accruing to sub-contractors and/or suppliers as a direct consequence of termination of subcontracts pursuant to sub clause 19.6 (c);

• iii. The sum of $2,824,063.72 representing anticipated loss of profit.

Loss of profits

6 The trial judge concluded that loss of profits could not be recoverable on termination of the contract under clause 15.5, because it was not provided for under sub-clause 19.6. This finding is not the subject of any appeal by the Respondent.

Issues

7 The trial judge upheld the claims under sub clause 19.6 (a) for value of work done under each contract. In respect of the Matura contract the sum of $1,306,577.00 was awarded. This is not the subject of appeal. In respect of the Yarra contract the sum of $600,000 was awarded. The trial judge upheld the claims under sub clause 19.6 (c) and awarded the sum of $4,619,028.30 and $3,577,942.46 respectively under each contract.

8 The issues on this appeal therefore relate to the awards made by the trial judge in respect of the Matura and Yarra contracts:-

• i. the award which relates to the claims under sub-clause 19.6 (a) of the General Conditions of Contract in respect of value of work done under the Yarra contract,

• ii. the other two, under sub clause 19.6 (c), in respect of the claims for reimbursement of alleged liabilities reasonably incurred by the respondent contractor. These latter two claims arose from the respondent's issue of two purchase orders, (one each in relation to each contract), and the alleged incurring of cancellation charges of 30 % of the value of any cancelled orders.

9 At issue therefore is:

• i. Whether the award under the Yarra contract in respect of the claim under sub clause 19.6 (a) for alleged value of works done was plainly wrong or otherwise reviewable as a matter of law.

• ii. Whether the claim under the Matura contract for the reimbursement of cancellation charges for cancelling the purchase order relating to the Matura Water Treatment Plant was actually in respect of a liability reasonably incurred in the circumstances by the contractor in the expectation of completing the works under sub-clause 19.6 (c).

• iii. Whether the claim under the Yarra contract for the reimbursement of cancellation charges for cancelling the purchase order relating to the Yarra Water Treatment Plant was actually in respect of a liability reasonably incurred in the circumstances by the contractor in the expectation of completing the works under sub-clause 19.6 (c).

Conclusion

Issue i — Claim under Sub-Clause 19.6 (a) – value of work done

10 Issue i. relates to the claim under sub clause 19.6 (a) for alleged value of work done under the Yarra contract. This is largely dependent on findings of fact made by the trial judge, as distinct from construction of the relevant contractual provision (clause 19.6 (a)) under which the claim was made.

11 Because the value of work actually done required findings primarily of fact, this was a matter for the determination of the trial judge, based upon the court's assessment and evaluation of the evidence, including that of the witnesses. The circumstances in which findings of fact can be reversed on appeal are limited by a requirement to first find that the trial judge had been plainly wrong in the assessment or evaluation of the evidence.

12 In relation to this particular claim it has not been demonstrated that the trial judge's findings and conclusions were plainly wrong.

Issues ii and iii — Claims under sub clause 19.6 (c)

13 Issues ii. and iii. both related to claims under sub clause 19.6 (c). Their determination required a construction of the term “liability which in the circumstances was reasonably incurred by the Contractor in the expectation of completing the Works”. That construction was properly considered by the trial judge to be a matter of law, (See paragraph 24 of the judgment) 1. It required an objective assessment of reasonableness i) in the context of the entire FIDIC contract ii) in the context of the relevant evidence as to the circumstances prevailing at the relevant time. The relevant time in this context would be the time of the purchase orders, when the cancellation penalties, for which reimbursement is being sought, were agreed.

14 The trial judge erred in concluding that the claims made under sub-clause 19.6 (c) in respect of both the Matura and Yarra contracts were reasonably incurred for the following reasons:

Purchase orders premature

15 In construing sub clause 19.6 (c) the trial judge appreciated that issue of the purchase orders, if intended to be orders for actual supply of equipment, would have been premature. This was because as at the time the purchase orders were purportedly placed for $15,396,761.00 for the Matura water treatment plant and $11,926,474.88 for the Yarra

water treatment plant for the supplying and installation of equipment for each plant

• i. The sites for each plant had not been finalized, and this remained the position up to the time of termination (see paragraph 10 of the judgment of the trial judge).

• ii. The Environmental Impact Assessment (EIA) for the Matura site had not been approved. Consequently neither had a Certificate of Environmental Clearance ( C.E.C) had been obtained for the Matura site. Similarly, no CEC had been obtained for the Yarra site. Without a C.E.C no plant could be constructed. The volume of water permitted to be abstracted depended on the C.E.C and the specific site eventually approved. The type of treatment required depended on the quality of water at the specific...