Supreme Court
Action No. 410 of 1980
28th April, 1981
Moe, J.

Mr. Dean Lindo, S.C. for the Plaintiff
Mr. Oscar Sabido, for the Defendant

Contract - Breach of contract - Counterclaim - Application to strike out counterclaim on the basis that counterclaim based on illegal contract designed to deprive Government of customs duties and because counterclaim was vexatious and an abuse of court process - Whether the agreement on which counterclaim based was illegal - Whether counterclaim contained sufficient particulars - Whether counterclaim was vexatious and an abuse of court process - Whether Plaintiff put at a disadvantage or injured by counterclaim.

J U D G M E N T

On the 15th December, 1980 the Plaintiff issued a Writ on which was indorsed the Statement of Claim. The Plaintiff claimed $7,872.50 the balance of the price of goods sold and delivered by the Plaintiff to the Defendant. Appearance for the Defendant was entered on the 24th December and on the 30th December the Plaintiff took out a Summons making application that the Plaintiff be at liberty to sign final judgment against the Defendant for the amount indorsed on the Writ.

2. On the 31st December, 1980 a Defence was filed in which the Defendant admitted receiving goods but denied owing $7,872.50 (the amount claimed). He alleged there was on the part of the Plaintiff a breach of the agreement under which the Defendant had received the goods. That as a result of that breach the Defendant suffered financial loss. In paragraph 7, which appeared under a heading "counterclaim", he claimed damages arising out of the alleged breach of contract.

3. On the 16th January, 1981 a Judge in Chambers ordered that the Plaintiff be at liberty to sign final judgment against the Defendant for the amount indorsed on the Writ - with the proviso that there be a stay of execution pending a summons on the counterclaim within 14 days or further order. The Defendant on 29th January, 1980 took out a summons applying for leave to amend the counterclaim which was granted on the 24th February.

4. In the Defence and counterclaim filed the Defendant repeated his allegations of a breach of contract and resulting financial loss. In paragraphs 7 to 11 which appear after the heading counterclaim it is set out as follows;

"COUNTERCLAIM

7. By way of counterclaim the Defendant repeats the allegations in paragraph 6 and claims that the Defendant is entitled to set off against the amount of the Plaintiff's claim the sum of $10,000.00 Belize currency, being ten percentum (10%) import duty on $100,000.00 Belize currency representing the cost of 100 tons of steel and wire mesh rolls at $1,000.00 Belize currency per ton imported by the Plaintiff on behalf of the Defendant in June, 1980 under the Defendant's Development Concession for the sole use of the Defendant.

8. The Defendant purchased steel from the Plaintiff subject to the agreement mentioned in paragraph 2 as follow:

9. Under the agreement between the Plaintiff and the Defendant the Defendant was required to purchase at current market prices inclusive of duty and the Plaintiff was required to credit to the Defendant's account as a refund after the Defendant had purchased all the 100 tons of steel and wire mesh rolls the sum of $10,000.00 representing the ten percentum (10%) import duty on the 100 tons.

10. The Plaintiff discontinued selling steel to the Defendant on the 4th September, 1980 and has not refunded the duty on the $65,001.60 worth of steel purchased by the Defendant and as a result the Defendant had to purchase the balance of the 100 tons somewhere else at a cost inclusive of duty.

11. The Defendant by way of counterclaim therefore claims the amount of $10,000.00 in the currency of Belize and costs."

5. The Plaintiff now applies for an order that the counterclaim be struck out on the grounds that it (1) does not disclose a reasonable cause of action; (2) is vexatious and an abuse of the process of the court.

6. In support of ground 1 it was contended:- (a) the Defendant is alleging an illegal contract in that once duty on goods is paid, that duty is only paid to Government and neither Plaintiff nor Defendant can decide otherwise as set out in paragraph 9 of the Defence and counterclaim; (b) the counterclaim does not contain sufficient particulars.

7. Now firstly what is the contract which the Defendant alleges was concluded between him and the Plaintiff? In order to determine this I have read what is set out in paragraphs 7 to 11 with that set out in paragraphs 3 to 5 of the Defence. Paragraphs 3 to 6 are as follows:

"3. Under this agreement the Plaintiff imported on or about June 1980, 100 tons of construction steel and wire mesh rolls for the exclusive and sole use of the Defendant in its construction project at the Bella Vista Housing Project at Mile 2½ Northern Highway, Belize District.

4. That pursuant to this agreement the Defendant authenticated the Customs Entry Form to the effect that the goods imported were solely for the use of the Defendant Company thereby enabling the goods to come in duty free.

5. That the Plaintiff was required to sell all the goods so imported to the Defendant Company but failed to do so thereby forcing the Defendant to discontinue purchasing steel products from the Plaintiff on the 4th September, 1980.

6. That as a result of the breach of contract by the Plaintiff to sell the duty free steel products only to the Defendant the Defendant suffered financial loss and delay in its construction project and had to find alternative places to purchase steel products at a much higher price".

8. Assuming that the statements set out are true, the goods were imported duty free and were to be sold to the Defendant who authenticated that the goods were imported solely for the use of the Defendant. If the goods were imported duty free, import duty is not paid for the goods. The Defendant agreed to pay the Plaintiff for the goods, a price which included an amount representing import duty. That amount representing duty was an amount with which the Plaintiff agreed to credit the Defendant when he had bought all the goods. I do not find that there is alleged an agreement to deprive or to defraud the Government of anything. Consequently, I am unable to uphold the submission that the Defendant's counterclaim disclosed an illegal contract. I also do not accept the submission that the counterclaim does not contain sufficient particulars. The Defendant has stated the agreement between himself and the Plaintiff. He has stated the materials he has purchased under the agreement, the amount he should be credited with thereunder and the amount he is claiming from the Plaintiff.

9. In support of the ground two, that the counterclaim is vexatious and and abuse of the process of the Court, it was submitted that the Court should take into account firstly, that the Defendant has abandoned his claim for damages and now claims the return of duty, secondly, that the Defendant has filed only recently i.e. as late as 31st March, 1981 an Affidavit of the Managing Director of the Defendant's company, testifying to an error in the statement of particulars of purchases as set out by the Defendant hitherto.

10. I do not accept the second limb as a ground for holding that a pleading is vexatious or an abuse of the process of the court. With respect to the first limb of this submission, I have already indicated above that in substance the Defendant is claiming from the Plaintiff a sum with which he has not been credited in accordance with the agreement between him and the Plaintiff. I now determine whether the Defendant has abandoned his original claim for damages for another claim. I have pointed out that the Defendant has repeated his allegation of breach of contract and financial loss. He has also stated the need to purchase from alternative sources. When paragraphs 10 and 11 of the counterclaim are read together it will be observed that firstly in paragraph 10 the Defendant adverts to the following:- (1) the Plaintiff discontinued selling steel to the Defendant---; (2) has not refunded the duty on the steel purchased---; (3) as a result i.e. of the discontinuance of sale to the Defendant, the Defendant had to purchase the balance of steel elsewhere at a cost inclusive of duty.

11. Then in the paragraph following, the Defendant says he therefore claims $10,000.00. This appears to be a claim for a sum incorporating (a) the amount with which he has not been credited or in his words refund of duty; and (b) the amount extra which he had to pay in purchasing balance of the steel elsewhere i.e. the duty on steel he paid by purchasing elsewhere. Accordingly, I do not hold that the Defendant has abandoned his claim for damages.

12. Even if it could be held that the Defendant has abandoned one claim, a claim for damages, and substituted another, a claim for a refund of a sum of money, the claim which the Plaintiff would face is not one which puts the Plaintiff at a disadvantage or injures the Plaintiff in any way.

13. There may have been inelegant drafting of the pleading, but in the result I do not hold that the counterclaim as amended is vexatious and an abuse of the process of the court. The application is refused. The Plaintiff is to bear the costs of this application.

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