Rainero v Cayman Rent-A-Villas
| Jurisdiction | Cayman Islands |
| Judge | (Smellie, J.) |
| Judgment Date | 11 February 1994 |
| Court | Grand Court (Cayman Islands) |
| Date | 11 February 1994 |
(Smellie, J.)
N.R.L. Clifford for the defendant;
G. Giglioli for the third party.
(1) Bonsor v. Musicians” Union, [1956] A.C. 104; [1955] 3 All E.R. 518.
(2) Chaudhry v. Prabhakar, [1989] 1 W.L.R. 29; [1988] 3 All E.R. 718.
(3) Eastern Shipping Co. Ltd. v. Quah Beng Kee, [1924] A.C. 177.
Agency-characteristics of relationship-independent contractor compared-agent of several principals without primary duty to one remains agent not independent contractor if potential conflict in obligations obvious and accepted
Agency-rights of agent-indemnity from principal-agent entitled to indemnity if meets principal”s liability to third party-right to indemnity arises contemporaneously with principal”s liability and not dependent on principal”s authorization to meet liability or agent”s promise to do so
Agency-duties and liabilities of agent-duties to principal––agent owes duties to exercise care and to act for benefit of principal-breach renders him liable for damages
In third-party proceedings, the defendant sought an indemnity from the third party in respect of liabilities she had incurred on his behalf to the plaintiff. The third party counterclaimed for damages for the defendant”s breach of the terms of the agency.
The third party”s villa was listed with the defendant”s rental agency. It was the defendant”s responsibility to obtain tenants, for which she was paid commission, while the third party retained responsibility for the management and maintenance of the property and for ensuring that it was fit to let. There was an understanding between them that the defendant might in certain circumstances make refunds to tenants after consultation with the third party, if they had bona fide complaints.
The defendant let the third party”s villa to the plaintiff for three weeks over the Christmas period 1991. The rent was paid to the defendant in advance and, less commission, was passed on to the third party. When the plaintiff became dissatisfied with the condition of the villa, he demanded a refund from the defendant, subject to three nights” occupation at a discount. The third party agreed to the three-night discount but expressly refused a refund. The defendant, however, under pressure from the plaintiff, promised to refund the whole amount claimed. When she failed to do so, the plaintiff brought proceedings against her to recover the amount claimed and she issued a third party notice against the third party. He failed to have the notice struck out (in proceedings reported at 1992–93 CILR 128) and the plaintiff subsequently obtained summary judgment against the defendant.
At the end of December, the defendant arranged an inspection of the property by the Department of Tourism, which resulted in a report that the premises were unfit for letting, whereupon the defendant cancelled future rentals which were to have taken place in February and April 1992. The third party subsequently arranged for the Department to make a further inspection at the end of February 1992 and this time a favourable report was made.
The defendant sought to enforce an indemnity from the third party in respect of the refund made to the plaintiff and the third party counterclaimed for damages from the defendant for her unauthorized cancellation of the 1992 bookings.
The defendant submitted that (a) she was entitled to full indemnity for the liabilities incurred because (i) she was acting as agent for the third party by virtue of the fact that their relationship allowed her to alter his legal position by entering into tenancies on his behalf; (ii) there had been a breach in the tenancy agreement with the plaintiff since the third party had failed to maintain the property in a tenantable condition; (iii) she had been entitled to request the report from the Department of Tourism in order to protect her own position; and (iv) her right to indemnity did not depend upon the third party”s authorization but arose, contemporaneously with the liability, the moment the plaintiff accepted the breach and opted for a refund; and (b) she was not liable in damages to the third party for cancelling the bookings in February and April 1992 since she had acted properly on the understanding that the premises were not fit to be let.
The third party submitted in reply that (a) the defendant was not entitled to an indemnity because (i) given the nature of her business, she was not acting as his agent but contracted with tenants as a principal on her own behalf; (ii) there had been no breach of the tenancy agreement with the plaintiff since the first report, obtained at the end of December 1991 from the Department of Tourism, had been dishonestly secured by the defendant and the very limited work on the premises needed to obtain the second favourable report at the end of February 1992 had been necessitated by a later storm; (iii) if the defendant had been acting as his agent, she had acted outside the scope of her authority since he had expressly refused to grant a refund; and (iv) she had breached her duties as agent, to act for the benefit of her principal, by seeking the report; and (b)he was entitled to damages in respect of the lost revenue from the bookings which the defendant had cancelled, since she was in breach of her duties as agent to exercise care and to act for the benefit of her principal, by cancelling bookings when the premises were in fact fit to be let.
Held, giving judgment for the defendant and granting the third party”s counterclaim in part:
(1) The defendant had acted as agent for the third party and all other villa owners whose properties she advertised. Her services were obtained by them all, including the third party, and the fact that she had no
obligation to promote the third party”s property above any other did not make her an independent contractor since any potential conflict of interest was obvious and accepted (page 69, lines 4–29).
(2) As agent for the third party, she had a right to an indemnity from him for the liability incurred as a result of his failure to maintain the villa in a tenantable condition. As the premises were not fit to be let, the liability and the right to indemnity arose the moment the plaintiff accepted that there had been a breach and opted for a refund and did not depend upon the defendant”s promise (against the third party”s express wishes) to make a refund. Moreover, the defendant had been entitled to request the Department”s report in order to safeguard her own position and there was nothing to suggest that the report was anything other than independent and impartial. The third party would accordingly be required to indemnify the defendant in respect of the refund paid to the plaintiff (page 69, line 40 – page 70, line 5; page 70, lines 13–21;page 70, line 32 – page 71, line 26).
(3) Nevertheless, the third party was entitled to damages in respect of the cancellation of the rental which was to have taken place in April, two months after the second favourable report had been received, since at that time the premises had officially been declared fit to let. The defendant had breached her duties as agent, to exercise care and to act for the benefit of her principal, by failing to make sure that the premises would not be fit for occupation at that time or to consider that any defective condition could be remedied in...
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Rainero v Cayman Rent-A-Villas
...(successfully in part) for loss caused to him by the defendant”s breach of her duty of care as an agent. The proceedings are reported at 1994–95 CILR 64. The judgment in favour of the defendant included post-judgment interest and costs and she now claimed pre-judgment interest (though she h......