The plaintiff developer and the defendant municipality entered into a supplementary agreement regarding the enhancement of a sewage system.
The trial judge found that the municipality breached the agreement by allocating sewage capacity to a competing developer before the plaintiff's subdivision was completed, and awarded damages for lost commercial tenancies.
On appeal, the Court of Appeal held that the trial judge erred in his interpretation of the agreement.
The court found that the clause granting the plaintiff a monopoly over sewage capacity was ultra vires as it conflicted with the municipality's statutory obligation under s. 86(1) of the Municipal Act, 2001 to supply sewage services where sufficient capacity exists.
The court severed the offending clause and concluded that the municipality did not breach the revised agreement.
Furthermore, the court held that the damages claimed for lost commercial tenancies were too remote.
The appeal was allowed and the action dismissed.
