Speedways Jamaica Ltd and Shell Company (WI) Ltd v Guy Morris

JurisdictionJamaica
Judge HARRISON, P. , PANTON, J.A. , McCALLA, J.A. (Ag.)
Judgment Date07 April 2006
Neutral CitationJM 2006 CA 19
Judgment citation (vLex)[2006] 4 JJC 0709
CourtCourt of Appeal (Jamaica)
Date07 April 2006

JAMAICA

IN THE COURT OF APPEAL

BEFORE:
THE HON. MR. JUSTICE HARRISON, J.A THE HON. MR. JUSTICE PANTON, J.A THE HON. MRS. JUSTICE McCALLA, J.A. (AG.)
BETWEEN
SPEEDWAYS JAMAICA LIMITED
APPELLANT
AND
THE SHELL COMPANY (W.I.) LIMITED
AND
GUY MORRIS
RESPONDENTS
Christopher Dunkley and Miss Marina Sakhno instructed by Cowan, Dunkley & Cowan for appellant
André Earle and Miss Anna Gracie instructed by Rattray, Patterson & Rattray for the 1 st respondent
Guy Morris, 2 nd respondent in person

BUILDING CONSTRUCTION - Legality of building on leased premises

LANDLORD AND TENANT - Tenancy verified

HARRISON, P.
1

This is an appeal from the judgment of Theobalds, J on 23 rd March 2001 in favour of the first respondent ("Shell") against the appellant ("Speedways") with costs and in favour of the appellant against the second respondent ("Morris"). Morris, who did not appear at the trial nor contest the suit, was ordered to pay the appellant the sum of One Hundred and Eighty-eight Thousand, Nine Hundred and Forty-one Dollars and Seventy-six cents ($188,941.76) with costs.

2

I agree with the reasoning and conclusions of Panton, J.A. in his judgment. These, however, are further comments of mine.

3

The basis of Speedways' case was that it was brought into contractual relationship with Shell by its negotiations and agreements with Morris who was the agent of Shell. Accordingly, both are liable to Speedways as principal and agent for their breaches and Speedways' consequential losses. No actual agency was claimed to exist nor contended for. Speedways relied on the apparent or ostensible agency that arose, or in the alternative, agency by estoppel.

4

The essence of the principle of agency is the will and consent of the principal. This conduct brings the relationship of agency into existence. The concept of ostensible authority was defined in the case of Armagas Ltd v Mundogas SA (TheOcean Frost) [1986] AC 717. Lord Keith at page 777 said:

"Ostensible authority comes about where the principal, by words or conduct, has represented that the agent has the requisite actual authority, and the party dealing with the agent has entered into a contract with him in reliance on that representation. The principal in these circumstances is estopped from denying that actual authority existed. In the commonly encountered case, the ostensible authority is general in character, arising when the principal has placed the agent in a position which in the outside world is generally regarded as carrying authority to enter into transactions of the kind in question."

5

Sujanani, the managing director of Speedways had no agreement with Shell, nor could he point to any holding out by Shell that Morris was its agent. It was Morris, who was approached by Sujanani directly, with a written proposal, and who without any prior input or knowledge of Shell suggested that Speedways operate its business at the Shell gas station premises operated by Morris at 138 Old Hope Road, St. Andrew. Consequently, a lease agreement was signed between Speedways and Morris on 20 th April 1990. This was not an agency agreement but a contract between two principal contracting parties. Speedways was not in that regard acting on any representation by Shell, by which Shell could be regarded or by which one could assume that Shell was authorizing the said transaction.

6

In the case of Freeman and Lockyer (A Firm) v Buckhurst Park Properties (Mangal) Ltd and another [1964] 2 Q.B. 480 the principle of ostensible authority was explained as arising from the conduct of the principal amounting to a holding out of some other person the agent, as competent to act on the principal's behalf.

7

The facts are that one of the directors of a company, to its knowledge, acted as, and performed the duties of managing director of the company, although he was not appointed as a managing director. He employed the plaintiffs, architects, to obtain planning permission and to do other work in respect of certain property development. The plaintiffs did the work and sued for their fees. The company contended that the liability was not the company's but that of the said director who employed the plaintiffs. The Court of Appeal held that the director did not have actual authority but had ostensible authority to employ the plaintiffs, as he had acted as managing director to the knowledge of the board of the company. Diplock, L.J. (as he then was) at page 503 said:

"An 'apparent' or 'ostensible' authority, on the other hand, is a legal relationship between the principal and the contractor created by a representation, made by the principal to the contractor, intended to be and in fact acted upon by the contractor, that the agent has authority to enter on behalf of the principal into a contract of a kind within the scope of the 'apparent' authority, so as to render the principal liable to perform any obligations imposed upon him by such contract."

8

There was no evidence led in the trial below of any representation by Shell to Speedways that Morris had the authority to deal with Speedways as Shell's agent. There was no basis for Sujanani to believe that Shell had given such permission to Morris.

9

Morris was the lessee of Shell and one of their dealers. At no time did Shell maintain otherwise, and in particular, Shell never represented that Morris was its servant or agent.

10

Sujanani approached Morris and on 20 th April 1991, both entered into a lease agreement, by which Morris himself leased the building in question to Speedways. Sujanani, in examination-in-chief, said:

"My renovation was by agreement with Morris after he requested architectural plans be submitted, which I did. I understood he wanted Shell's approval . The drawings were done about one week after lease signed on April 20, 1991. I gave Morris the plans and after a few days, he got back to me and gave me the green light to start the renovation work as soon as possible. I did so immediately. Containers bought, stored at 129 ½ Old Hope Road, which is opposite. Got Parkinsons Constructions, who start foundations at 138. Also built a room to store material, and work commenced in May 1991." (Emphasis added)

11

The construction was completed in about November 1991. Up to the time of completion and the opening of the shop by Speedways in December 1991, no representative of Shell had given any approval of the construction to Speedways. Sujanani at page 152 of the record further said:

"In dealing with Morris, I never got permission from Shell prior to construction ... I was dealing with Shell through Morris ...I never really discovered that Morris was a lessee of Shell ... until now, today ..." (Emphasis added)

12

and further:

"I thought Guy Morris was part of Shell and I dealing with Shell through Guy Morris."

13

Morris led Sujanani to believe so. Sujanani was less than diligent. He had no confirmation from Shell.

14

The documentary evidence admitted at the trial, clearly reveals Shell's non-involvement in and objection to any construction at the said premises. Shell wrote to Morris a letter dated 21 st November, 1991, exhibit 35, signed by Phillip Hibbert, retail marketing manager. It reads:

"RE: CONSTRUCTION ON STATION SITE

You are hereby instructed to cease all construction taking place on the Shell Service Station located at 138 Old Hope Road.

Please also arrange for the immediate removal of the metal posts which have been planted in the Old Hope Road entrance to the station."

15

Shell, by letter dated 24 th December 1991 to Morris (exhibit 36,) referred to its letter, exhibit 35, and complained of:

"... Shell's concerns regarding the illegal construction which you have undertaken at the station without Shell's permission."

16

and continued:

"Since then you have continued the construction in flagrant disregard of the company's concerns and in direct contravention of the company's instructions as enunciated by myself and your Retail Supervisor, Mrs. Emmanuel. These continued actions on your part have the effect of compelling us to take strong actions to re-establish control over all developments at the station and to ensure that all such developments are consistent and in conformity with Shell's vision/plans for the station."

17

Phillip Hibbert, in evidence, asserting that no permission was given to Morris to sub-let, with reference to the construction, said:

"During his tenure, construction observed on one corner, a building being erected facing Old Hope Road, We did not give permission. We had several meetings with Guy Morris in which we registered our objections-subsequently confirmed in writing. Guy Morris from time of meetings represented buildings being erected bv himself."

18

On the basis of this evidence Theobalds, J was correct to conclude that there was no agency arising, whether actual or apparent giving rise to any contractual relationship between Shell and Speedways.

19

The learned trial judge in his reasons, at page 128 of the record, said:

"...on my findings of fact from Hamilton's evidence there was never any acquiescence in inducement by Shell Company in the acts of the plaintiff. The plaintiff it was who ignored Shell and proceeded with modification and construction of the building."

20

At page 133 he said:

"There is not a thread (sic) of evidence of any contractual arrangement between Shell and Speedways."

21

and further at page 135, said:

"I find on a balance of probability that the evidence of Mr. Sujanani that Shell held out Morris as their agent is a total fabrication."

22

However, the learned judge, on page 126 - 127 said:

The 1 st Defendant vacillates in it's acceptance or rejection of the 2 nd defendant as it's servant or agent. It is my finding of fact, based on the evidence adduced and documents tendered, that the 2 nd ...

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