Graham J
IN THE GRAND COURT OF THE CAYMAN ISLANDS
HOLDEN AT GEORGE TOWN, GRAND CAYMAN
CAUSE NO. 703 OF 1996
BETWEEN:
CAYMAN WATER COMPANY
Plaintiff
AND:
CAYMAN HOTEL AND GOLF INC. and
ELLESmere BRITANNIA LTD.
Defendants
Judgment of The Honourable Mr. Justice Graham, on Tuesday, March 3, 1998, in George Town, Grand Cayman.
APPEARANCES:
For the PLAINTIFF:
Mr. R. Alberga, Q.C.,
Mr. B. Ashenheim
For the DEFENDANTS:
Mr. I. Croxford, Q.C., instructed by Mrs. S. Bridges of Ritch & Conolly
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1 THE COURT: This case is entitled in the Grand Court of the Cayman Islands cause number 703 of 1996 between the Cayman Water Company plaintiff, first defendant Cayman Hotel and Golf Inc., and the second defendant Ellesmere Britannia Ltd. The appearances are these: Mr. Ramon Alberga, Q.C., and Mr. Bryan Ashenheim of Myers and Alberga appeared for the plaintiff. Mr. Ian Croxford, Q.C., with Mrs. Cherry Bridges of Messrs. Ritch & Conolly appeared for both defendants.
2 The factual background is very briefly this: The plaintiff, Cayman Water Company has a licence issued under the Water (production and supply) Law (1996 Revision). I am going to call that "the law" in future. It is for the region of the Seven Mile Beach and West Bay. That licence was granted to the plaintiffs by the Governor-In-Council and it is expressed to be for that region; that is to say, Seven Mile Beach and West Bay.
3 The defendants are the developers of a hotel Britannia development on the West Bay Road, also golf course, condominium, et cetera. The amended statement of Claim seeks relief from the plaintiffs. The factual allegation against the defendants is that wrongly -- and I use that phrase in the broad sense, wrongly -- they have produced water and supplied it to properties within the Britannia development and thereby have infringed, if I may
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1 use that phrase, the licence I have referred to issued to the plaintiffs by the Governor-In-Council.
2 the plaintiffs by the Governor-In-Council.
3 I turn to the Statement of Claim. In paragraph 4 of the amended Statement of Claim the plaintiff alleges this:
4 the amended Statement of Claim the plaintiff alleges this:
5 the first defendant and Hyatt Britannia Corporation
6 Limited -- I am editing as I go along -- acting as itself
7 or agent supplied by means of pipes not only the hotel,
8 which is the Hyatt, and the golf course, and Beach Club
9 owned by the first defendant, which they supplied with
10 water prior to the 25th of March -- or the 6th of May 1991,
11 but also to all the Britannia condominia and subdivisions
12 developed by the second defendant and sold to individual
13 purchasers who continue to receive and pay to the second
14 defendant for such water.
15 They then set out that historically on the 31st of
16 May 1996 they wrote a letter complaining about this and
17 threatening legal action.
18 Now, the law in question unto which the licence was
19 issued is the Water (production and supply) Law of 1979.
20 Section 12 of that law (1) reads as follows:
21 "Whoever --
22 (a) subject to subsection 2-
23 (i) produces water with the intention
24 of supplying it for reward; or
25 (ii) supplies water for reward;
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1 (b) contravenes any provision of this Law;
2 or
3 (c) for any purpose connected with this Law makes any statement or representation in the truth of which he does not believe, proof of his belief being upon him
4 is guilty of an offence and liable on summary conviction to a fine of five thousand dollars and to imprisonment for one year, and, in the case of a continuing offence, a fine of one hundred dollars per day for each day the offence continues after conviction in the first instance."
5 Reading the law as a whole, I have to ask myself the question: Has a right, been enacted by the legislation, giving the plaintiffs as the undoubted concessionaires under that law, the right to pursue a private remedy against the defendants whom they allege have infringed their right causing them loss, damage and the potentialities of future loss? The general principle of statutory interpretation is that unless something is spelled out in a statute it is quite wrong for a court to import it into the statute. And in general, the proposition of law is as follows: unless one can spell out
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1 a private right to sue from the statute then that right does not exist. 02:48 PM
2 does not exist. 02:48 PM
3 I turn to very helpful dicta in a leading case on this very matter. X(minors) v. Bedfordshire C.C. This was 02:48 PM
4 the decision of the House of Lords. The question of fact was whether the imperfect performance by a local authority of its statutory duties relating to the education and welfare of children could fund an action for negligence by those very children adversely or said to be adversely affected by the local authorities' actions or inactions, and the court had to decide how one should regard -- look at the statute to see whether such a private right could be spelled out of the statute. Lord Browne-Wilkinson at page -- I should say the case is reported at 1995 3 All ER at page 353, but I turn to the judgment of Lord Browne-Wilkinson at page 364 letter C. And I read as follows under the title: "Breach of statutory duty simpliciter. This category comprises those cases where the statement of claim alleges simply (i) the statutory duty, (ii) a breach of that duty, causing (iii) damage to the plaintiff. The cause of action depends neither on proof of any breach of the plaintiff's common law rights nor any
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1 allegation of carelessness by the defendant. 02:52 PM
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3 The principles applicable in determining whether such statutory cause of action exists are now well established, although the application of those principles in any particular case remains difficult." 02:52 PM
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8 To which I say amen. 02:52 PM
9 "The basic proposition is that in the ordinary case a breach of statutory duty does not, by itself, give rise to any private law cause of action. However, a private law cause of action will arise if it can be shown, as a matter of construction of the statute, that the statutory duty was imposed for the protection of a limited class of the public and that Parliament intended to confer on members of that class a private right of action for breach of the duty. 02:52 PM
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25 There is no general rule by reference to which it can be decided whether a statute does create such a right of action but there are a number of indicators. If the statute provides no other remedy for its
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1 breach and the Parliamentary intention to protect a limited class as shown, that indicates that there may be a private right of action since otherwise there is no method of securing the protection the statute was intended to confer. If the statute does provide some other means of enforcing the duty that will normally indicate that the statutory right was intended to be enforceable by those means and not by private right of action.11
12 And His Lordship referred there to Cutler v Wandsworth
13 Stadium Ltd. [1949] 1 All ER 544. And the leading case of Lonrho Ltd. v. Shell Petroleum Co. Ltd. [1981] 2 All ER --- that's a decision of the House of Lords.
16 "However..."
17 His Lordship continued:
18 "...the mere existence of some other statutory remedy is not necessarily decisive. It is still possible to show that on the true construction of the statute the protected class was intended by Parliament to have a private remedy.
24 Thus the specific duties imposed on employers in relation to factory premises
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1 are enforceable by an action for damages,
2 notwithstanding the imposition by the
3 statutes of criminal penalties for any
4 breach: See Groves v. Lord Wimborne,
5 [1898] 2 QB 402."
6 We turn to the law. It is undoubtedly the case and so far
7 as I can make a finding of fact, or mixed fact and law: in
8 this case I found that the plaintiffs are indeed within the
9 category of a limited class of persons, but what I am
10 afraid I do not find if there is anything in that law which
11 persuades me that Parliament intended them to have a right
12 to take private action, or that any private action or the
13 scope of any private action can be extrapolated from any
14 combination of the sections, or that any duty was imposed
15 by that law such as to give rise to a private right to
16 bring suit against anyone interfering with their
17 concession. What is perfectly plain is that what the
18 legislator had in mind was action -- enforcement action --
19 in the event of a breach over a whole series of possible
20 breaches in the criminal courts. In particular, I note
21 that a per diem penalty could be enforced upon any
22 mal-doer -- wrongdoer I should say. However hard I try, I
23 simply cannot -- and I have tried hard -- I cannot construe
24 that statute as providing the plaintiffs -- and they would
25 have to show me that that right was explicit or implicit in
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1 the law, and I am not able to make that finding; having
2 read the law repeatedly and with care. Accordingly, that
3 part of the statement of claim which depends upon an
4 alleged breach of statutory duty will be struck out from
5 the amended statement of claim.
6 I had addressed to me an argument by Mr. Alberga
7 which at first I found attractive. He reminded me of
8 what -- well he didn't remind me, he informed me, because I
9 did not know of it, of the Interpretation Law (1995
10 Revision), Section 47 which reads as follows:
11 "The imposition of a penalty or fine by
12 any law in the absence of expressed
13 provision to the contrary shall not
14 relieve any person from liability to
15 answer for damages to a person injured."
16 I was asked to interpret that as meaning that even if a
17 duty is not spelt out in the law, the fact that a fine is
18 imposed in the sense in some way, which I was not able to
19 understand, provides a private law remedy. I interpret
20 that as meaning that no defendant in a civil action can
21 say, oh, but I'm liable to criminal liability and therefore
22 I'm not to be held to be liable of the tort or breach of
23 contract which it is said I am liable otherwise for. And I
24 so interpret Section 47 of the Interpretation Law (1995
25 Revision). I come to those conclusions without the
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1 slightest hesitation.
2 I turn now to paragraph 12 of the amended Statement of Claim, and it alleged:
3 "The plaintiff has suffered loss and/or damage by reason of the knowing and intentional interference by an unlawful means by the defendant, their servants or agent officer, one or other of them with the performance of the licence and/or the plaintiff's rights under and by virtue of the licence the plaintiff was unable to give, in particular, the amounts of damage in the discovery."
14 Yesterday and possibly erroneously -- it matters not -- I gave leave for an amendment of Section 12 which now reads as follows:
17 "Further and/or in the alternative the plaintiff has suffered loss or damage by reasons of the knowing and intentional interference done with the intention of injuring the plaintiff and causing his loss and damage by unlawful means by the defendant, their servants or agent. With the performance of the licence and/or the plaintiff's rights trades and/or business
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1 under or by virtue of the licence..." 03:02 PM
2 And then the assertion as to the inability to give 03:02 PM
3 particularity at that stage is repeated. 03:02 PM
4 This is one of those causes of action which has 03:02 PM
5 developed, is developing I will not say it to be 03:03 PM
6 discouraged, it is. It arose or seems to have arisen from 03:03 PM
7 the myriad of trade union cases which beset the courts in 03:03 PM
8 the United Kingdom but not exclusively so in the 1980s. 03:03 PM
9 The simple proposition is this; that if the defendants set 03:03 PM
10 out to injure a plaintiff and do so in respect of their 03:03 PM
11 trade and business, then damages should flow from conduct 03:04 PM
12 of that description. Now there is some debate as to 03:04 PM
13 whether intention is required or not. I need not deal with 03:04 PM
14 that at this stage I think probably it is required but 03:04 PM
15 whether it is or not, it is alleged at the moment in the 03:04 PM
16 amended Statement of Claim. Prima facie therefore that is 03:04 PM
17 properly pleaded and stands as an assertion which the 03:04 PM
18 plaintiffs hope to prove should this matter ever come on 03:04 PM
19 for trial. Mr. Croxford, having in a gentlemanly way 03:04 PM
20 consented to the amendment of the Statement of Claim seeks 03:04 PM
21 to strike it down by reference to the matter which has 03:05 PM
22 caused me the most concern in dealing with this particular 03:05 PM
23 case at the stage that it is at; namely, interlocutory 03:05 PM
24 proceedings. Mr. Croxford, on behalf of the defendants, 03:05 PM
25 seeks to strike out all of the Statement of Claim. He 03:05 PM
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1 attacks paragraph 12 of the Statement of Claim by reference to the ex turpi causa non oritur actio. What that means is this; is that if the behaviour of the plaintiff is such that it would be wrong for him to recover damages, the courts have traditionally deprived him of the fruits of his wrongdoing, if I may express it in those terms. The factual background is this; Mr. Croxford points out to me that in a number of significant respects the plaintiffs have not been acting in accordance with the licence granted to them by the Governor. Their obligation is to produce potable water themselves. Their obligation is to own the plant in which that operation is accomplished themselves. On the face of it they would appear to have failed to do so. There is affidavit evidence before me, and as it is uncontroversial, I can therefore accept at this stage that what the plaintiffs actually do is to buy in water, which is at that stage potable, which I take to mean safely consumable by members of the public, and then to preserve its condition by the addition of chlorine and other chemical substances. On the face of the licence, that does not appear to be what was intended when the Governor granted the licence. Mr. Croxford powerfully and persuasively urges upon me that for me to let paragraph 12 stand would permit them to profit from their own wrongdoing. He quotes me the example given in the case of
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1 the burglar who falls out of a window when burglarling some
2 unfortunate person's house and has the nerve to sue the
3 householder for negligence and complains that it will be
4 some time before he's able to climb up walls again and he
5 should be compensated for what he would have made away with
6 as a busy and skillful burglar. The courts have had no
7 difficulty in saying in that case, of course, he shall
8 certainly not have the fruits of his crime. We are a world
9 away from circumstances like that.
10 I am referring now to the case of Euro-Diam Ltd. v.
11 Bathurst, a decision of the Court of Appeal reported in
12 1991 Queen's Bench and I am turning to the judgment of Lord
13 Justice Kerr, and I go to page 35. He reads:
14 "In my view the relevant principles can
15 then be summarised as follows:
16 (1) The ex turpi causa defence
17 ultimately rests on a principle of public
18 policy that the courts will not assist a
19 plaintiff who has been guilty of illegal
20 (or immoral) conduct of which the courts
21 should take notice. It applies if in all
22 the circumstances it would be an affront
23 to the public conscience to grant the
24 plaintiff the relief which he seeks
25 because the court would thereby appear to
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1 assist or encourage the plaintiff in his illegal conduct or to encourage others in similar acts...
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4 The problem is not only to apply this principle, but also to respect its limits,
5 in relation to the facts of particular cases in the light of the authorities."
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8 Then His Lordship set out a large number of well-known cases and examples where the court had applied the doctrine.
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11 "(3) However, the ex turpi causa defence must be approached pragmatically and with caution, depending on the circumstances..."
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15 And he referred to Lord Justice Bingham, as he then was, in Saunders v. Edwards.
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17 "This applies in particular to cases which at first sight appear to fall within (2) ..."
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20 Which I have referred to above.
21 "Thus: situations covered by (2) (i) above must be distinguished from others where the plaintiff's claim is not founded on any illegal act, but where some reprehensible conduct on his part is
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1 disclosed in the course of the proceedings, whether by the plaintiff himself or otherwise...
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4 In such cases the ex turpi causa defence will not succeed."
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6 I am aware of the criticisms of some of the dicta in the Euro-Diam case in the majority judgment of Lord Goff of Chieveley in Tinsley v. Milligan [1994] 1AC page 340. And I point out that in this case, the plaintiff's case is pleaded without any reference to alleged illegal conduct on their part. It is no part of their case at the pleading stage to set up any alleged deviation from the terms of the licence in order to plead their case.
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14 I return to the words which I asked to be presented in italics. The courts will not assist a plaintiff who has been guilty of illegal or immoral conduct of which the courts should take notice. What is Mr. Croxford's point here? It is this: That by trading outside the scope of their licence their behaviour is such that public policy should prevent them recovering damages. I do not agree. I do not think it is possible at this stage for a judge to make a judgment as to exactly what their breaches were in terms of public policy to enable me to strike out paragraph 12 of the defence and I decline to do so. He submits to me that a balancing exercise is inappropriate. I do not
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1 agree. Plainly what will have to done at some stage is an evaluation of precisely what the relationships between the plaintiff and the defendants were, because they were very convoluted. For example, on a number of occasions the defendants have actually supplied water to the plaintiffs at their request, and indeed have as an agreed fact contributed the sum of $58,110 to the plaintiff for capital expenditure on their plant. That shows the close relationship which the plaintiff and the defendant have had together over the period of the contract. It is said that they should be debarred from recovering damages from the date of July 1994, which is the last time that they supplied potable water to the plaintiffs. I take no action under that submission because that is simply a matter of the trial judge to assess what, if any, damages should arise from the relationship between the parties. I do not have to deal with an injunction at this stage, so that I move on to paragraph 13. There was no fiduciary relationship between the plaintiffs and the defendant. Consequently I can see no basis for the pleaded constructive trust and I therefore strike out paragraph 13 of the Statement of Claim. Similarly, as to the remaining cause of action in paragraph 12, this is not a case for an account. I strike out paragraph 14 of the Statement of Claim, save as to A and B as perhaps the trial judge may
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1 order an injunction, although one supposes damages would be 03:17 PM
2 an alternative, but C certainly survives, I do not take any 03:17 PM
3 action at this stage. But 14 A and B are struck out. 03:18 PM
4 Damages will either flow from the establishment of the tort 03:18 PM
5 in paragraph 12 or they will not. That is all. 03:18 PM
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12 The Honourable Mr. Justice Graham
13 Judge of the Grand Court
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