Roseal Services Ltd v Challis, Clarke and Reid
| Jurisdiction | Barbados |
| Judge | Kentish, J. |
| Judgment Date | 26 June 2014 |
| Neutral Citation | BB 2014 HC 74 |
| Docket Number | 1736 of 2008 |
| Court | High Court (Barbados) |
| Date | 26 June 2014 |
High Court
Kentish, J.
1736 of 2008
Mr. Barry L.V. Gale, QC in association with Mrs. Leodean Worrell, for the plaintiff.
Mrs. Marguerite Woodstock-Riley, QC in association with Mr. Satcha S-C. S. Kissoon and Ms. Shermaine Desnoes for the first, second and third defendants
Real Property - Vendor and purchaser — Agreement for sale — Whether there was another date for completion after initial date had passed — Good and marketable title — Whether time was of the essence — Specific performance — Recission — Whether defendants entitled to return of deposit paid.
By writ of summons dated 29 October 2008 and filed 31 October 2008, Roseal Services Ltd (“the plaintiff') instituted a claim against Michael Challis, Marcus Clarke and Anthony Reid (“the defendants”) seeking the following relief:
“1. Specific performance of an agreement in writing between the plaintiff and the defendants dated the 30th day of May 2008 (the “Contract”) for the sale by the plaintiff to the defendants of certain freehold property situate at Road View in the parish of Saint Peter, Barbados and known as “The Kings Beach Hotel”…
2. Further or alternatively, damages for breach of the said contract in addition to, or in lieu of specific performance.
3. Interest on the balance of the purchase price at the rate of 10% per annum from the date when the plaintiff was willing and able to complete to the actual date of completion or at such rate or for such other period as the Court shall order.
4. All necessary and consequential directions and accounts.
5. Further or other relief
6. Costs.”
By summons filed 29 October 2008, the plaintiff then applied for summary judgment under Order 81 of the Rules of the Supreme Court, 1982. This application was heard before me and I gave my ruling on 19 December 2008 in which I dismissed the plaintiff's application.
I also ordered that:
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(1) the matter proceed to a speedy trial and the affidavits filed in the action stand as pleadings; and
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(2) there be liberty to all parties to cross-examine the deponents of the affidavits.
The plaintiff's application for summary judgment was followed by applications for discovery and security for costs.
After a long and meandering journey through the judicial system caused by the applications and appeals to both the Court of Appeal and the Caribbean Court of Justice from decisions given, this matter finally returned to me for trial in October 2013. At that point the defendants brought an in limine application to dismiss the action pursuant to the provisions of s. 344(1) of the Companies Act, Cap 308 of the Laws of Barbados (“The Act”) on the ground that the registration of the plaintiff as an external company had ceased to be valid. I declined to dismiss the action but stayed the matter until the registration of the plaintiff was revived. That registration revived, the action finally came on for trial.
As a result of the Order made on the 19 December 2008 that the matter proceed to a speedy trial and the affidavits filed stand as pleadings, the matter came to trial on the basis of the affidavits filed on behalf of the plaintiff as follows:
- Affidavit of Wilfred Arthur Abrahams on 29 October 2008; 2. Affidavit of Zarina Khan on 2 December 2008; 3. Second Affidavit of Wilfred Arthur Abrahams on 2 December 2008; 4. Third Affidavit of Wilfred Arthur Abrahams on 29 July 2013 and 5. Affidavit of Edmund A. Bailey, QC SCM on 29 July 2013.
In response, the following affidavits were filed on behalf of the defendants:
- Affidavit of Naeem Ahmed Ebrahim Patel filed 24 November 2008; and 2. Affidavit of Azaz Khan Juman filed on 29 July 2013.
During the hearing the only deponent not cross-examined on his affidavit was Mr. Patel despite repeated attempts by counsel for the defendants to sub-poena him.
At trial, the plaintiff also called Mr. Edmund A. Bailey, QC, an attorney-at-law of many years standing. On the application of counsel for the plaintiff, there being no objection by counsel for the defendants, Mr. Bailey was deemed an expert witness on conveyancing practice in Barbados. His evidence is largely unchallenged and accepted by the court.
Mr. Juman, an attorney-at-law, was also called as a witness to conveyancing practice in Barbados, but on behalf of the defendants.
There was no application to have him deemed as an expert witness.
There is little dispute on the material facts. The following facts appearing from the evidence, documents and correspondence filed in this matter may be taken as more or less common ground.
The defendants entered into negotiations with the plaintiff, a company incorporated and registered as an international business company in the Commonwealth of Bahamas, for the purchase of beachfront property situate at Road View, St. Peter on which Kings Beach Hotel was located (“the property”). This hotel was unoccupied and had been unoccupied for two years prior to the commencement of negotiation for its sale and purchase between the parties.
Although negotiating its sale, the plaintiff did not own the fee simple interest in this property. Its authority to sell arose out of a Debenture/Mortgage made between the plaintiff on the one part and J. G. L. Hotels Limited and its wholly owned subsidiary, Kings Beach Hotels Limited, on the other.
By a Debenture and Charge made by way of Legal Mortgage dated the 11th day of June 2004 (Exhibit “WAA 3”) and recorded in the Land Registry on the 15th day of July 2004 as Deed No. 5567 of 2004 between Kings Beach Hotel Limited as Mortgagor, J. G. L. Hotels Limited as Borrower and the plaintiff as Mortgagee, the Mortgagor as beneficial owner of the property in consideration of a loan in the sum of one million one hundred pounds sterling (£1,100,000.00) to the Borrower charged the property as security for that loan.
The Debenture/Mortgage stipulated that it was to rank after the existing encumbrances. There were then in existence four prior mortgages on the property held by the Bank of Nova Scotia (First Mortgagee), Joanna Marks (Second Mortgagee), Caribbean Financial Services Corporation (Third Mortgagee) and Joanna Marks (Fourth Mortgagee) respectively. The plaintiff, therefore, became the Fifth Mortgagee and could only sell its interest subject to that of the prior ranking mortgagees.
The terms and conditions of the Debenture/Mortgage are not relevant to this claim. It is, however, important to note that in the Debenture/Mortgage, the Mortgagor certified, inter alia, that the approval of the Exchange Control Authority had been obtained for the Debenture/Mortgage. As it transpired, approval had been obtained for the loan but no approval had been obtained for the Debenture/Mortgage, an issue which became a focal point in the action.
On 20 April 2008, the plaintiff and the first defendant executed a “Lock Out Agreement” (Exhibit “WAA 7”) by which they agreed to “use their best endeavours to put themselves in a position to enter an Agreement for Sale of the Property… on or before the 30th day of April 2008 (hereinafter called the ‘lock out period’)”. On this agreement, the plaintiff was represented by Mr. Wilfred Abrahams and the defendants by Mr. Naeem Patel.
The Lock Out Agreement also provided that the parties “[would] instruct their respective attorneys-at-law to conduct all normally necessary legal work to have the Agreement for Sale ready at the earliest opportunity and reasonable expedition”.
It further stipulated that:
“The said Agreement for Sale will state that should the Buyer (or its nominee) not complete the purchase within 6 weeks of the date of the Agreement for Sale due to no default of the Seller, the additional purchase sum of One million five hundred thousand (US$1,500,000.00) will be paid by the Buyer to the Seller.”
After execution of the Lock Out Agreement, Mr. Abrahams under cover of a letter dated 22 April 2008 (Exhibit “WAA 9”) provided Mr. Patel with a copy of the plaintiff's Debenture/Mortgage.
Mr. Patel, by letter dated 24 April 2008 (Exhibit “WAA 10”) and addressed to Mr. Abrahams, sought “copies of the muniments of title including any High Court Orders”. To this letter Mr. Abrahams responded by e-mail dated 24 April 2008 (Exhibit “WAA 11”) and attached the draft agreement for sale, the conveyance dated 17 October 1986 from Green Development Ltd. to Kings Beach Hotel and a plan of the property dated 26 August 2005 and certified by J. M. Peterkin, Land Surveyor.
In a subsequent letter dated 8 May 2008 (Exhibit “WAA 15”), Mr. Patel set out the conditions on which his client was willing to proceed. These conditions were that the purchase price was to be BDS $64 000 000.00, completion was to take place within 90 days from the exchange of contracts and prior consent to the sale was to be obtained from mortgagees ranking ahead of the plaintiff.
Mr. Abrahams in his e-mail of 8 May 2008 (Exhibit “WAA 16”) responded to Mr. Patel's letter of the same date intimating that the attorneys for the prior mortgagees had been contacted in order to obtain the requested consents. He pointed out, however, that releases from the prior mortgagees would nonetheless be required and once the Agreement for Sale was signed and the deposit paid, “it will be a formality to get an order from the court for the parties to release the property upon the necessary assurances being given”.
Mr. Abrahams and Mr. Patel then exchanged correspondence by which they sought to negotiate the precise terms and conditions of any contract by exchanging a number of draft agreements. Their discussions centred on the purchase price...
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