Bonus Car Rental v Services Ltd and Ian Dunn

• Jurisdiction: Jamaica
• Court: Supreme Court (Jamaica)
• Judge: Brown Beckford J
• Judgment Date: 23 January 2024
• Year: 2024
• Docket Number: CLAIM NO: SU2021CD00400

Between

Bonus Car Rental

Claimant

and

Services Limited and Ian Dunn

Defendant

[2024] JMCC Comm 02

CLAIM NO: SU2021CD00400

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

COMMERCIAL DIVISION

Assessment of Damages — Detinue — Breach of Fiduciary Duty — Equitable Damages

Appearances:

Mr. Harrington McDermott instructed by McDermott Reynolds McDermott for the Claimant

Mr. Ronald Paris instructed by Paris & Co for the Defendant

IN OPEN COURT

Brown Beckford J

INTRODUCTION

1 The genesis of this Assessment of Damages is grounded in a derivative claim brought by Bonus Car Rental and Services Limited (“ the Company”), against one of its directors, Ian Dunn. The Company sought an injunction and damages for breach of fiduciary duty and/ or conflict of interest, detinue and/ or conversion, and losses as a consequence of operationg without its property. The Defendant's liability was determined by Default Judgment granted on 28 ^th March 2022, with damages to be assessed.

2 At the close of the hearing, the parties were ordered to file written submissions by 31 ^st October 2023. Submissions were filed on behalf of the Claimant but none were received on behalf of the Defendant.

BACKGROUND

3 The Claimant is a limited liability company incorporated under the laws of Jamaica with its core business being the rental of motor vehicles. Mr. Robert Sprague provided the startup capital for the company, he said by way of a Director's Loan, while Mr. Ian Dunn had the responsibility of overseeing the day-to-day operations of the business. Each had a fifty percent (50%) shareholding in the Company, and both were named the first Directors.

4 Differences developed between Mr. Dunn and Mr. Sprague, and Mr. Sprague purported to remove Mr. Dunn from the day-to-day supervision of the Company's operations and assign him to supervise the daily operations of the Company's companion business, Bonus Parts Accessories & Auto Imports Limited. A discussion between the two men on the 8 ^th of December 2020 to resolve the issues came to naught, and on or about 9 ^th December 2020, Mr. Dunn ceased to work or engage with the operations of the Company. Subsequent to his departure, Mr. Dunn supposedly:

• (i) removed four (4) of the Company's motor vehicles along with their respective titles, registration papers and road licences;

• (ii) changed the password on the Company's car rental tracker application, thereby preventing the Company from tracking the whereabouts of the vehicles;

• (iii) withdrew the sum of One Million Six Hundred and Forty Thousand Dollars (JMD$1,640,000.00) from the Company's business account, said withdrawal not being accounted for as a Company expense; and

• (iv) used the Company's vehicles detained by him in the operation of his newly formed business, Falcon Auto Parts & Vehicle Accessories Limited.

5 Between 29 ^th December 2020 and 15 ^th April 2021, several requests were made to Mr. Dunn for the return of the vehicles and the relevant documents. However, each appeal was met with silence or bare refusal. On 15 ^th April 2021, Mr. Sprague gave notice of a Board of Directors meeting to Mr. Dunn, complying with S. 212 of The Companies Act of Jamaica, the agenda being to authorize the Company to take action against Mr. Dunn if he continued to detain the property of the Company. Mr. Dunn did not attend this meeting.

COURT PROCEEDINGS & EVENTS FOLLOWING

6 Mr. Sprague sought leave of the court to commence a derivative action pursuant to S. 212 of The Companies Act on behalf of the Company, against Mr. Dunn, for the breach of his fiduciary duties to the Company and to recover all assets, items and property of the Company. Batts J granted permission for the commencement of the claim. The claim was filed on 16 ^th September 2021 and served on Mr. Dunn. Mr. Dunn failed to file an Acknowledgement of Service or a Defence within the time stipulated by the Civil Procedure Rules (“CPR”) 2002 (as amended on the 3rd of August 2020). Consequently, on 28 ^th March 2022, this Court entered Default Judgment against the Defendant, granting the following orders inter alia:

• 1. Application is granted as phrased in terms of paragraphs 1–3 of the Notice of Application filed on the 18 ^th January 2022:

  • I. Judgment is entered against the Defendant.

  • II. An injunction requiring the Defendant to quit and deliver up possession of all the Claimant's property including:

    • (i) Motor vehicles:

      • (a) Nissan Latio with license plate no. 7520HR and chassis no. N17000118;

      • (b) Toyota Hiace with license plate no. 9219HT and chassis no. KDH2230015222;

      • (c) Toyota Vitz with license plate no. 5409HQ and chassis no. NSP1302082247;

      • (d) Nissan Sylphy with license plate no. 3653HS and chassis no. TB17005956;

    • (ii) Keys for said motor vehicles identified at 2(i) above;

    • (iii) All documents relating to the ownership and / or control of said motor vehicles but not limited to:

      • a. Vehicle Titles;

      • b. Registration Papers;

      • c. Road Licences;

  • III. All other assets of the Claimant that are in the Defendant's possession and/ or control;

  • IV. All stamps and seals that belong to the Claimant that are in the Defendant's possession and/or control.

  • V. Damages to be assessed.

• 2. The Defendant is to comply with orders 1 & 2 within 7 days of the date of service on him of this order. This order is to be endorsed with Penal Notice;

• 3. Pre-trial Review for assessment of damages is fixed for September 20 ^th 2022 at 11:00 am for 1 hour;

• 4. Cost of the claim and this Application to the Claimant to be agreed or taxed.

• 5. The Claimant's Attorneys-at-Law are to prepare, file and serve a copy of this order.

7 Mr. Dunn did not comply with the Order for the return of the Company's vehicles. Consequently, Mr. Sprague engaged the services of a Bailiff who was able to successfully retrieve the motor vehicles and the relevant documents on 3 ^rd November 2022.

SUBMISSIONS

8 The Court was grateful to receive the skeleton submissions and final submissions filed on behalf of the Claimant and had regard to them in their entirety, though only portions of them are referred to in the Judgment.

CLAIMANT'S SUBMISSIONS

9 Counsel on behalf of the Claimant, Mr. Harrington McDermott, submitted that in cases where goods where detained and have been returned damages should be awarded for dentinue. He submitted that the Defendant detained the Claimant's profit earning goods thereby causing the Claimant to suffer substantial loss. He relied on Dion Moss v The Attorney General of Jamaica Anor [2017] JMCA Civ 13, for the principle that the normal measure of damages is the loss suffered through the detention of the goods, which sum would be the market rate at which the goods could have been hired during the period of detention. He also submitted, relying on the same case, that damges for detinue should be assessed from the date of the Defendant's refusal to deliver up the motor vehicles to the date of their return.

10 Further, Counsel contended that in assessing a reasonable award the Court is required to take into account any vagaries, imponderables, vicissitudes and imprecision in the calculation of the Claimant's loss. Recognising that the vehicles would not have been rented every day, he recommended that the Court reduce the amount of rental income claimed by fifteen percent (15%).

11 It was also submitted that in instances of breach of fiduciary duty the Court can award equitable compensation for its losses. To this end reliance was placed on Remedies for Torts and Breach of Contract, 2 ^nd Edition. Counsel contended that the Defendant, as a director of the Company, caused the Company to suffer loss as result of his detention of the motor vehicles, forming a competing business with that of the Claimant and using said detained motor vehicles in the competing business. However, Counsel noted that the compensatory objective for detinue, breach of fiduciary duty and conflict of interest is substantially the same. Therefore, the award for damages for the detention of the Claimant's motor vehicles would be sufficient to compensate the Claimant for being unable to benefit from the hiring out of said vehicles.

12 Lastly, it was Counsel's submission that the Defendant should be ordered to pay the Claimant equitable compensation in the sum of One Million Six Hundred and Forty Thousand Dollars (JMD$1,640,000.00) for its breach of fiduciary duty arising out of the Defendant's withdrawal of said sum from the Claimant's Bank of Nova Scotia account.

LAW AND ANALYSIS

DAMAGES

13 The Claimant seeks damages for detinue, breach of fiduciary duty and/or conflict of interest. The fundamental compensatory principle underpins the assessment of damages in contract and tort law. The principle provides that the purpose of an award of damages is to compensate the injured party for loss, rather than to punish the wrongdoer. The general rule is that damages should, so far as a monetary award can, place the claimant in the same position as if the contract had been performed or the tort had not been committed. In Murray v Lloyd and others [1990] 2 All ER 92 (“ Murray”) the England & Wales Chancery Division summarized the general principle of damages as: 1

The starting point is that the object of any award of damages is to give a plaintiff compensation for damage, loss or injury suffered. The measure of damages is, in general, the sum required to put an injured party in the same position as he would have been in if he had not suffered the wrong for which compensation is being awarded.

14 This principle is equally applicable at common law and at equity. In the case of AIB Group (UK) Plc v Mark Redler & Co Solicitors [2014] UKSC 58 (“ AIB Group”), the Court, in reviewing the dicta of Lord Browne-Wilkinson in the case of Target Holdings Ltd (a firm) v Redferns [1996] AC 421, stated: 2

He observed that…at common law there are two principles...