Landmark Ltd and another v American International Bank ((in Receivership))
| Jurisdiction | UK Non-devolved |
| Judge | Lord Hodge |
| Judgment Date | 22 May 2014 |
| Neutral Citation | [2014] UKPC 17 |
| Date | 22 May 2014 |
| Docket Number | Appeal No 0069 of 2012 |
| Court | Privy Council |
[2014] UKPC 17
Privy Council
From the Court of Appeal of Antigua and Barbuda
Lord Neuberger
Lord Clarke
Lord Sumption
Lord Toulson
Lord Hodge
Appeal No 0069 of 2012
Landmark Limited
Kim Franklin Carlo Taczalski
(Instructed by HowardKennedyFsi LLP)
American International Bank
Hugh C Marshall Jnr
(Instructed by Marshall & Co)
Heard on 1 April 2014
This dispute is between a company ("Landmark") which provided electricity and other services to the Woods Centre, which is a shopping and commercial centre ("the centre") in St John's, Antigua, and a bank in receivership ("AIB") which was the subtenant of premises in that centre. The principal issues in this appeal are (i) whether AIB entered into a contract with Landmark to pay it for the electricity and other services which it supplied, and (ii) if so, whether Landmark transacted as the agent of Woods Development Ltd ("WDL") or on its own behalf.
WDL developed the centre which comprised twenty two units and was completed in about February 1996. AIB provided funding to WDL for the development of the centre. During its construction, WDL sold units in the centre to commercial enterprises which entered into agreements with it to manage the centre on its behalf ("management agreements"). One such enterprise was Epicurean Limited ("Epicurean"), which purchased the largest unit (originally parcel no. 998) to create a 25,000 square foot supermarket which became the anchor unit of the development.
Epicurean entered into a management agreement with WDL on 9 November 1994. In that agreement Epicurean undertook responsibility to meet the cost of insurance, maintenance and upkeep of the unit and for all public services, utilities and other expenses charged or supplied to the unit (clause 9). Epicurean appointed WDL as its manager to manage the centre and to act on its behalf in performing its duties (clause 1). One of those duties was the payment of electricity charges for the shops to the Antigua Public Utilities Authority ("APUA") and the running of a standby generator (clause 7). In return Epicurean undertook to pay service charges to WDL (Clause 5) and to pay WDL monthly for the electricity supplied to its unit (clause 7). WDL was empowered to engage any suitably qualified person, firm or corporation to "do any work or perform any services … within the scope of the Manager's duties under [the management] agreement, without being in breach of any fiduciary relationship with [Epicurean]" (clause 3).
On 11 November 1994 Epicurean granted AIB a 99-year lease of the mezzanine level of its unit. AIB sub-let units within the mezzanine floor to offshore internet gaming enterprises which required a twenty-four hour electricity supply. In the lease Epicurean undertook to AIB to enforce WDL's undertakings in the management agreement for the benefit of the demised premises and AIB undertook to pay Epicurean a monthly service charge and accepted the restrictions on the use of the unit and the common parts of the centre which were set out in clause 12 of the management agreement. The lease did not expressly address responsibility for payment of invoices for utilities provided to the demised premises. In a separate arrangement Epicurean and AIB agreed to share the costs of the provision of electricity to the air conditioning in the supermarket unit in the ratio of 2:1. The Board infers that AIB undertook responsibility to meet the charges for electricity and water to the mezzanine unit as each of the units within the centre had its own meters for electricity and water and was billed separately for the provision of those utilities.
On 15 June 1997 AIB entered into a management agreement with WDL in relation to a building to be erected on parcel No 1135 in the centre. That agreement, which was the only written contract between WDL and AIB produced in this appeal, is not relevant. It did not affect the contractual relationships between WDL and Epicurean and between Epicurean and AIB in relation to the leased mezzanine floor in the supermarket unit.
There appears to have been close and informal commercial relations between the parties when the centre was being developed. Harris J in para 33 of his judgment dated 22 December 2009 recorded evidence that AIB, Epicurean and WDL had one or more directors in common in the 1990s. Mr Jean Beaulieu was a director of each of those companies and also later a shareholder and director of Landmark. A Mr William Cooper also appears to have been a director of both AIB and the companies involved in developing the centre. AIB went into receivership in July 1998 at the instigation of the regulatory authority. Later the enforceability of AIB's loan agreements to fund the development was successfully challenged in legal proceedings. See paras 15 and 16 below.
The courts in Antigua have held that since the mid-1990s there was a contract between AIB and WDL for the supply of electricity and other services to the leased mezzanine unit. It appears that the contract came into being by a course of conduct. In this appeal Landmark has not challenged the finding that there was a contract between AIB and WDL but submitted that it was replaced by a contract with Landmark after 1 February 2005.
In this action against Landmark and WDL, Mr Edward Smith, AIB's receiver and manager, has asserted that AIB paid sums due to WDL for the supply of electricity by offsetting them against its liability to AIB under an overdraft or loan to fund the development. Landmark and WDL have challenged AIB's entitlement to do this. For a number of years after the centre opened, AIB purported to meet its liability to WDL by this method.
In July 2003 APUA intimated to WDL that it would not be able to maintain continuity in the supply of electricity to the centre. As it was essential to the occupiers of the centre who stocked perishable goods, including Epicurean's supermarket, that they enjoyed continuity of electricity supply, WDL entered into an agreement with Landmark, which was incorporated to provide maintenance services, electricity, water and sewerage to the centre, to obtain those services. Mr John Carter, the managing agent of WDL, and Mr Jean Beaulieu raised the capital to fund Landmark and Mr Carter became its managing director. Landmark purchased equipment and diesel fuel to generate the needed electricity.
Before Landmark was incorporated, Mr John Carter, purporting to be Landmark's managing director, wrote on 31 January 2004 to the owners of units in the centre intimating that Landmark had been appointed to take responsibility for managing the centre, including the supply of electricity. He requested that the owners make their cheques payable to Landmark. On 7 February 2005, WDL wrote to the unit owners to confirm Landmark's appointment and to make the same request. None of the occupiers objected to the arrangement. Landmark was incorporated on 26 March 2004 and began providing services, including the supply of electricity, on 1 February 2005. Landmark sent invoices to the occupiers, including AIB, on a monthly basis. There was a dispute as to when Mr Edward Smith, AIB's receiver and manager, first learnt of Landmark's role. Harris J in his judgment of 22 December 2009 held that he had actual knowledge of the commencement of Landmark's services "in 2004 and in any event by the end of February 2005" (para 35 of his judgment). That finding has not been challenged.
Landmark continued to send AIB invoices which listed separate sums due for the provision of electricity, water and its service charge. It also sent AIB separate invoices for its share of the electricity used to operate the supermarket unit's air conditioning system. AIB did not pay any of them. When by letter dated 17 October 2005 Landmark demanded payment of arrears of EC $173,493.49 and...
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