Cable & Wireless Jamaica Ltd v Alliance Investment Management Ltd

• Jurisdiction: Jamaica
• Judge: McDonald-Bishop, J
• Judgment Date: 02 March 2012
• Neutral Citation: [2012] JMSC Civ 1
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2010 / HCV 00602
• Date: 02 March 2012

[2012] JMSC Civ 1

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CIVIL DIVISION

CLAIM NO. 2010 / HCV 00602

Between

Cable & Wireless Jamaica Limited (T/A Lime)

Claimant

and

Alliance Investment Management Limited

Defendant/ Ancillary Claimant

and

Reliant Enterprise Communication Limited

Ancillary Defendant

Mrs. Denise Kitson and Mrs. Suzanne Risden-Foster instructed by Grant, Stewart, Phillips & Co. for the claimant

John G. Graham and Ms. Annaliesa Lindsay instructed by John G. Graham & Co. for the defendant/ ancillary claimant

Contract — bank guarantee — guarantee given pursuant to Telecommunications Agreement — characteristics, meaning and effect of guarantee — construction of guarantee — whether guarantor contravenes terms of guarantee by refusing to pay on demand

Civil Procedure —summary judgment — judgment after determination of a preliminary issue of law — considerations to be applied in granting judgment — whether claimant entitled to judgment on a proper construction of the guarantee-CPR, rules 26.1 (2)(j); 15.2.

IN CHAMBERS

McDonald-Bishop, J

1 This is an application brought by the claimant, Cable &Wireless Jamaica Limited (trading as LIME) (hereinafter referred to as C&WJ), against the defendant, Alliance Investment Management Limited (hereinafter referred to as Alliance). C&WJ is seeking the judgment of the court against Alliance after determination of a preliminary issue under the court's general powers of case management contained in rule 26.1 (2) (j) of the CPR or for summary judgment against Alliance on the ground that Alliance has no real prospect of successfully defending the claim and/ or the preliminary issue pursuant to rule15.2 of the CPR.

Background

2 The undisputed facts, as disclosed on the statements of case and the relevant evidence proffered in relation to this application, may be summarized as follows. The claimant, as is well known, is a company duly registered under the laws of Jamaica as a licensed provider of telecommunication services on the island. Indeed, it can safely be said that it is one of the giants in the country's telecommunications industry.

3 Reliant Enterprise Communication Limited (Reliant), named as ancillary defendant, is a company also duly registered under the laws of Jamaica. It is a Service Provider licensed under the Telecommunications Act 2000 (the Act) to provide telecommunication services to the public.

4 Pursuant to the provisions of the Act, C&WJ agrees to interconnect with Reliant upon the terms and conditions of an Interconnection Agreement entered into between them on or about 30 July 2003. Reliant also buys International Private Leased Circuits (IPLC's) from C&WJ which allows Reliant to convey and terminate international traffic on C&WJ's network as well as the network of other third parties.

5 A term of the Interconnection Agreement, as contained in clause 28.1, is that Reliant would provide a bank guarantee from a bank licensed in Jamaica and approved by C&WJ as a financial guarantee for the payment of certain charges payable by Reliant to C&WJ. Clause 28.1 actually states in part:

‘The provision of any and all Services by C&WJ to Telco in accordance with the Interconnection Agreement, and C&WJ's compliance with the terms of this Agreement are conditional on Telco keeping in place such guarantee which provides, at a minimum, a financial guarantee for the payment of the maximum Early Termination Charges payable by the Telco to C&WJ (pursuant to Part 1 of the Tariff Schedule) in the event of early termination of this Agreement.’

6 Pursuant to this provision, Alliance, also a company duly registered under the laws of Jamaica, by a letter dated 28 January 2009, wrote to C&WJ stating in so far as is material to these proceedings.

Dear Sirs:

Re: Reliant Enterprise Communications Ltd/ Steve Twomey

Pursuant to Clause 28.1 of the Interconnection Agreement made between Cable &Wireless Jamaica Limited (‘C&WJ’) and Reliant Enterprise Communications Limited (‘RECL’), C&WJ has stipulated that RECL shall furnish C&WJ with an acceptable Guarantee by a guarantor approved by C&WJ, as security for RECL's obligations in accordance with the Interconnection Agreement.

We have agreed to Guarantee with RECL, and we hereby affirm that we are Guarantor's and responsible to C&WJ, on behalf of RECL, up to an amount of $600,000.00 and no more, and we undertake to pay C&WJ without cavil or argument any sum or sums within (on a cumulative, aggregate basis)the limit of six hundred thousand United States Dollars (US$600,000.00),upon C&WJ providing us with a written demand for payment (without C&WJ needing to prove or show grounds).

This guarantee will expire on May 1, 2009 (‘The Expiry Date’), unless previously renewed and advised to C&WJ hereunder in writing, which is received by us on or before the Expiry Date shall be honoured by us and we shall have no liability in respect of any claim received by us after the Expiry Date…’

This guarantee was given by Alliance under the hands of Robert G. Chin and Peter D. Chin, Vice President and President, respectively.

7 On 30 June 2009, Alliance again gave another guarantee by letter to C&WJ in identical terms to the above guarantee of 28 January except that the expiry date was changed to 30 September 2009. The guarantee remains, in all other respects, the same as the previous one.

8 On 30 September 2009, C&WJ, by a letter of even date addressed to Alliance (attention Mr. Peter D. Chin), indicated that it was ‘calling on the bank guarantee dated June 30, 2009’ and asked that Alliance ‘make[s] immediate arrangement’ to pay US$404,650.37 as partial claim on the amount for the guarantee Alliance had undertaken to pay. Nothing more was said about the guarantee or the sum being demanded.

9 On 1 October 2009, Alliance, in writing, acknowledged receipt of C&WJ's demand but refused to pay the sum demanded. It raised objections to paying in full the sum demanded by C&WJ and indicated that it is liable to C&WJ on the guarantee only to the extent of J$5, 891,225.70. It proceeded to pay C&WJ this sum expressing that it represented ‘final settlement under [our] guarantee of June 30, 2009.’

10 C&WJ accepted the payment but refused to accept it as final settlement of the guarantee and this was communicated to Alliance. A flow of correspondence ensued between the parties with Alliance refusing to pay what was demanded and C&WJ indicating that it viewed the stance of Alliance as a breach of the terms of the guarantee. No amicable resolution was reached on the issue and so C&WJ initiated court proceedings by claim form filed on 15 February 2010. In that claim it seeks, inter alia, the sum of US$338, 484.02 (JA$30,370,072.51 at the exchange rate of JA$89.7238:US$1.00) being what it says to be the balance due and owing by Reliant to C&WJ under the terms of the Interconnection Agreement. The basis for the claim is that Alliance stands in breach of the guarantee of 30 June 2009.

11 Alliance has not admitted this claim and has filed its defence in response. By way of defence, it states that, while it accepts that it has given the guarantee, its contention is that what is due and owing by it to C&WJ under the Interconnection Agreement has been duly paid and that C&WJ's interpretation of the guarantee is incorrect. It also denies that it had undertaken to pay sums due by Reliant to C&WJ without proof, justification or condition or without the need for C&WJ to prove or show grounds.

12 It has, in turn, brought a counter-claim against C&WJ for several declarations relevant to the guarantee. These declarations being sought are to the following effect:

• (i) It is only liable to C&WJ under its guarantee for the indebtedness incurred only under Reliant's Interconnection Agreement with C&WJ.

• (ii) C&WJ is not entitled to recover under the guarantee dated 30 June 2009 sums already paid under the earlier guarantee for which the defendant had already paid the sum of US$300,000.00 on or before 4 May 2009.

• (iii) C&WJ is not entitled to recover from it any sum due by Reliant by virtue of Reliant's additional agreement with C&WJ for the provision of International Private Leased Circuit Service (IPLCS)

• (iv) The Interconnection Agreement between C&WJ and Reliant is distinct and separate from the IPLCS.

• (v) The defendant had already settled its indebtedness under the guarantee by the payment of the JA$5,891, 225.70.

The Application

13 The defence and counter-claim advanced by Alliance, in resisting C&WJ's claim to be paid under the guarantee, prompted C&WJ to make the application for court orders now under consideration. By this application, C&WJ seeks orders pertinent to the guarantee in the following terms:

• (1) That on a proper construction of Alliance's letter of guarantee dated 30 June 2009 issued to C&WJ pursuant to clause 28.1 of the Interconnection Agreement between C&WJ and Reliant, Alliance is liable to pay any and all sums due and owing by Reliant up to the stipulated maximum of US$600,000.00 upon presentation of the written demand dated 30 September 2009 issued prior to the expiry of the said guarantee without cavil or argument and without C&WJ needing to prove or show grounds.

• (2) That Alliance by its letter of 1 October 2009 failed to honour its guarantee dated 30 June 2009 when it challenged C&WJ's entitlement to the sums requested in C&WJ's written demand dated 30 September 2009.

• (3) That, accordingly, Alliance has no real prospect of defending the claim and that summary judgment be granted in favour of C&WJ against Alliance in the sum of US$338,484.02 being the balance due and owing by Reliant to C&WJ under the terms of the Interconnection Agreement dated 30 ^th July 2003 which Alliance undertook to pay upon written demand from C&WJ.

The parties' contention

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