Delta Petroleum (Caribbean) Ltd v British Virgin Islands Electricity Corporation (British Virgin Islands)

Waiver by election applies only where a party must choose between alternative and mutually exclusive rights. Continuing contractual performance does not waive a right to performance relief where the contract permits deliveries to be withheld, reduced or suspended to a discretionary extent in response to a continuing interference.

When an appellate court reverses an order, it may require restoration of money or property transferred under that order, together with interest. Restitution restores what the respondent received; it does not generally compensate every consequential loss. A change of position need not result from a voluntary act in reliance on receipt. It is enough that receipt caused the material change and that restitution would be unjust.

The Seller agreed to supply the Buyer’s requirements for petroleum products. Clause 10 permitted the Seller to withhold, reduce or suspend deliveries where specified events interfered with its supply or storage facilities. After its St Croix facilities closed, the Seller temporarily supplied fuel from Antigua but later claimed relief from further deliveries.

The High Court held that continuing performance amounted to an irrevocable election which waived the right to performance relief. It ordered specific performance and liquidated damages. The Court of Appeal reduced the damages award to US$385,000 but otherwise dismissed the Seller’s appeal.

The Seller appealed to the Judicial Committee. The principal questions were whether waiver by election applied, what damages remained payable, and what restitution should follow from reversing the order for specific performance.

1. Appeal allowed and the Buyer’s claim dismissed, subject to liquidated damages of US$21,000. Lord Leggatt delivered the Board’s judgment. Waiver by election requires alternative and mutually exclusive courses of action. Clause 10 did not create a binary choice between terminating and affirming the agreement. It permitted the Seller to withhold, reduce or suspend deliveries to such extent as it thought fit. Continuing to supply fuel from another source was therefore compatible with later suspending deliveries while the original supply interference continued.

2. The closure created a continuing state of affairs. Clause 10 did not require performance relief to be exercised once or at a single time. Its requirement that reasonable steps be taken to minimise delay or damage also supported the Seller’s attempt to find another source and negotiate revised terms before suspending deliveries. The courts below therefore erred in finding that the Seller had irrevocably elected against performance relief.

3. A rejected request for relief did not require the Buyer’s consent before becoming effective. Clause 10(3) identified matters which the non-performing party had to prove in court if contested. The Buyer’s refusal merely denied the existence of the Seller’s right; it did not breach a contractual duty. The Seller’s counterclaim for contractual damages was therefore unsustainable.

4. The Seller remained liable for three failures to maintain minimum storage levels because it had not given the notice required to obtain the contractual grace periods. It was not liable for two later failures covered by valid performance relief. Liquidated damages were reduced to US$21,000.

5. An appellate court has inherent power to reverse the practical consequences of an erroneous order. The respondent must ordinarily restore money or property received under the reversed order, or its value where specific restoration is impossible, together with interest. This restitution does not extend to compensation for every consequential loss. Loss caused by the interim injunction could instead be addressed under the Buyer’s undertaking in damages.

6. A change of position need not arise from a voluntary decision made in reliance on receipt. Causation is sufficient, subject to injustice. The Buyer had not shown that its position could not be restored through an amendment to its regulated tariff. The High Court was to assess the value received through specific performance, interest and any liability under the interim undertaking.

1. Privy Council: Allowed the appeal, dismissed the Buyer’s claim except for US$21,000 in liquidated damages, and directed a High Court inquiry into restitution and liability under the interim undertaking.

2. Court of Appeal of the Eastern Caribbean Supreme Court: Reduced liquidated damages from US$794,000 to US$385,000 but otherwise dismissed the Seller’s appeal.

3. Eastern Caribbean Supreme Court (High Court): Held that the Seller had waived performance relief by election, ordered specific performance, awarded US$794,000 in liquidated damages and dismissed the counterclaim.