Corporation of Hamilton v BELCO

• Jurisdiction: Bermuda
• Judgment Date: 16 November 2018
• Date: 16 November 2018
• Docket Number: Civil Jurisdiction 2018 No 163
• Court: Supreme Court (Bermuda)

[2018] Bda LR 99

In The Supreme Court of Bermuda

Civil Jurisdiction 2018 No 163

Between:

Corporation of Hamilton

Plaintiff

and

Bermuda Electric Light Company Limited

Defendant

Mr M Diel and Mr D Williams for the Plaintiff

Mr K Robinson and Mr H Tucker for the Defendant

The following cases were referred to in the judgment:

Aircare Ltd v Sellyeh [2015] Bda LR 32

Investments Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896

Mannai Investments Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749

Antaios Compania Naviera SA v Salen Rederierna AB [1985] AC 191

Rainy Sky v Kookmin [2011] UKSC 50

Wood v Capita Insurance Services Ltd [2017] UKSC 24

Intercontinental Natural Resources Ltd (in liquidation) v Conyers Dill & Pearman [1982] Bda LR 1

In re City Equitable Fire Insurance Co [1925] 1 Ch 407

In re Brazilian Rubber Plantations and Estates Ltd [1911] 1 Ch 425

Construction of wayleave agreement — Principles of construction — Commercial consequences — Indemnity provision in agreement

JUDGMENT of Hargun CJ

Introduction

1. This action relates to the construction of a Wayleave Agreement (the “Agreement”) dated 10 May 2012 between The Corporation of Hamilton (the “Corporation”) and the Bermuda Electric Light Company Limited (“BELCO”). In its Originating Summons dated 22 May 2018 the Corporation seeks a declaration that clause 3.22 of the Agreement be interpreted as placing an obligation on BELCO of relocating the Apparatus from overhead to underground upon receiving notice from the Corporation.

2. This issue arises in the context of a dispute between the Corporation and BELCO relating to the request of the Corporation that BELCO underground a portion of its supply network in Union Street in the City of Hamilton, as part of the refurbishment project being undertaken by the Corporation. The Corporation claims that its request to underground a portion of BELCO's supply network is “the relocation of Apparatus” and that BELCO is obliged to carry out its request under clause 3.22 at no cost to the Corporation. BELCO disputes the position taken by the Corporation and argues that the effect of the Corporation's request was to fundamentally alter the nature of the power supply to Union Street and that such a request does not come within the terms of clause 3.22.

3. The Corporation also claims that in any event, any and all costs incurred by it in relation to the relocation of Apparatus are recoverable by it from BELCO under the indemnity provision contained in clause 3.10. BELCO disagrees that clause 3.10, when properly construed, provides such an indemnity to the Corporation.

The relevant contractual provisions

“1.2 “Apparatus” means the underground ground and overhead electrical supply apparatus and equipment necessary to supply electricity to, from and within the City of Hamilton boundaries together with ancillary items including, but not limited to, buildings manholes and covers, poles, pole stays, ducts, switchgear, conduits and cables

2.1 Subject to the terms and conditions of this wayleave the Grantor agrees that during the Wayleave Period unless sooner terminated pursuant to clause 4 of the Utility Company may:

2.1.1 subject to the grant of Necessary Consents install, erect, inspect, keep, maintain, adjust, repair, alter, replace and/or remove the Apparatus at the Property in the locations indicated by the Plan and

2.1.2 by its employees or agents or contractors with or without materials and appliances without notice to the Grantor at reasonable times on a Working Day (or at any time in emergency) enter onto the Property to install, erect, inspect maintain adjust repair alter replace and/or remove Apparatus

Provided that such rights are personal to the Utility Company and may not be assigned shared transferred or disposed of to 1/3 party said as may be permitted pursuant to clause 3.19

The Utility Company shall:

3.1 on or before the Commencement Date and thereafter on or before the first day of each year pay the Annual Fee which shall be paid proportionately for any part of a year to the Grantor

3.3 prior to inspecting maintaining adjusting repairing altering replacing or removing Apparatus to obtain and maintain any Necessary consents

3.8 make good to the reasonable satisfaction of the Grantor any damage to the Property and adjoining property or any chattel of the Grantor or of any third party caused by the exercise of the rights hereby granted

3.9 pay indemnify keep and hold harmless the Grantor against any breach by the Utility Company of any Utility Company obligation contained herein

3.10 pay indemnify keep and hold harmless the Grantor against all claims liabilities losses damages demands costs and expenses (including but not limited to costs and expenses in connection therewith) related to the Apparatus

3.11 insure (with an insurance company of repute) for not less than One Million Dollars against any liability of the Grantor in relation to the Apparatus and the Property with respect to (1) death or injury to or accident to any person; (2) any breach of obligation herein on the part of the Utility Company; (3) the use or operation and presence of the Apparatus at the Property; (4) any operation of the Utility Company at the Property; (5) any act neglect or default by the Grantor or his respective employees or agents or any person on the Property with the actual or implied authority of the Grantor fifth

3.21 not interfere with the rights of the Grantor to occupation and ownership of the Property provided such does not interfere with the rights of the Utility Company hereunder

3.22 within an agreed period of time of receipt of a notice from the Grantor to relocate Apparatus as therein referred to and to make good any damage thereby caused to the reasonable satisfaction of the Grantor's and

3.23 insure at the Utility Company's own expense that any buildings or structures in which Apparatus is situated are maintained notwithstanding such buildings may be owned by the Grantor all the Utility Company”

Respective arguments of the parties

4. In April 2017 at the Corporation notified BELCO that it required BELCO to relocate the Apparatus located on Union Street as part of the Union Street refurbishment project. The project involved the removal of the overhead electrical infrastructure in Union Street and replacing it with underground conductors. In response BELCO advised that it was willing to undertake this project provided that the Corporation made a contribution in the amount of BD $26,020. In seeking the financial contribution BELCO has taken the position that there is a significant difference between relocating their equipment and making a...