Court name
Court of Appeal of Turks and Caicos Islands
Case number
CL 155 of 2013

AG TCI v. M&A Services Ltd. (CL 155 of 2013) [2015] TCACA 3 (18 September 2015);

Law report citations
Media neutral citation
[2015] TCACA 3
Coram
Zacca, P
Mottley, JA
Forte, JA

IN THE SUPREME COURT

TURKS AND CAICOS ISLANDS

CIVIL DIVISION

ACTION NO CL 155/2013

BETWEEN:                     

THE HONOURABLE ATTORNEY GENERAL

OF THE TURKS AND CAICOS ISLANDS                                   APPELLANT

And

M & A SERICES LIMITED                                                             RESPONDENT

Before:

The Right Honorable Mr. Justice Zacca, President

The Honorable Mr. Justice Mottley, Justice of Appeal

The Honorable Mr. Justice Forte, Justice of Appeal

Mr. David Phillips, Q.C. and Mr. Patrick Patterson for the Appellant

Mr. Ariel Misick, Q.C. for the Defendant

On 3 June, 4 June, 18 September 2015

Forte J.A

1.             This appeal arises out of the granting of what is called a Conditional Purchase Lease by the Government of the T.C.I. to the Respondent, M & A Services Limited.

2.             As recorded by the Learned Trial Judge the following facts were undisputed at the trial.

3.             On 8th October, 1993, the Turks and Caicos Government (TCIG) leased a parcel of land known as parcel 60809/42/1 in the Bight and Thomas Stubbs on Providenciales to the Respondent for commercial development. The lease was a standard Conditional Purchase Lease (CPL) under which the Respondent was required to pay annual rent of US$5,150, for the first three years and thereafter, an annual rent of US$10. The Respondent was also required to build a Service Station on the land within three years at a cost of no less than US$100,000. The Lease gave the Respondent an option to purchase the land for US$51,500 at the end of the term. That sum represented 50% of the market value of the land, so discounted in accordance with the Crown Land Policy which allowed Belongers to acquire land for commercial development at preferential rates.

4.             The Respondent, in keeping with the agreement, developed the land by building the service station within the required time period of three (3) years. Consequently, in or about the year 2000, the Respondent applied for the freehold title.

5.             By letter dated 22 February, 2000, the Minister with responsibility for that portfolio (i.e. for Crown Lands) approved the transfer of the land to the Respondent in return for the payment of the agreed purchase price as also the arrears of rent.

6.             As the Minister’s letter has become the real issue in this appeal, it is set out in full hereunder.

7.             It is addressed to the Respondent in the following terms:

‘‘Dear Mr. Smith,

Re Request for Freehold Title - Parcel 60809/42 Providenciales

I refer to your request for Freehold title to parcel 60809/42 Juba Park, Providenciales.

I am therefore please (sic) to inform you that in accordance with the Executive Council’s decision, it has been agreed that Freehold Title should be granted to you on the said parcel.

The cost of the Freehold Title is $51,500. In addition you are in arrears to the amount of $10,340 which must be paid before Freehold title is granted.

I should be grateful if you would contact the Registrar of Lands to whom I am sending a copy of this letter to have the necessary documents executed”

8.             The Respondent did not pay the monies or pursue the transfer pursuant to the Minister’s letter but remained in occupation of the land after the Lease expired in October 2001.

9.             On 11th August, 2010 the Respondent paid the arrears of rent as of 2001 and on 12 August, 2010, wrote to TCIG requesting that the title to the land be transferred to the company.

10.          On 5th October, 2010, TCIG refused to transfer the title unless and until the Respondent paid mesne profits of US$46,110.28 and advised the Respondent that the land would have to be revalued before it could be transferred.

11.          On 10th November, 2010 TCIG sent a notice of demand for the sum of US$46,110.28 which the Respondent paid in full on 18th December. 2010. The Appellant, nevertheless, refused to transfer the land unless the Respondent agreed to pay its ‘current value’ appraised by the Government Valuation Department at $870,000.00.

12.          The Respondent continued in possession and TCIG made a further demand for mesne profits and by Notice dated 26th March, 2012 required the Respondent to make payment of the sum of US$7,788.72 within 21 days failing which TCIG would take steps to recover possession of the land. The Respondent did not pay the sum demanded and TCIG subsequently served a Notice to terminate the Respondent’s tenancy on or before 7th October, 2012.

13.          On 20th September, 2013, TCIG issued these proceedings to recover possession of the land and mesne profits in respect of what it asserted was the unlawful occupation of the land by the Respondent since 2001.

The Respondent’s defence to the Claim is that it is a purchaser in possession under a binding agreement for sale and that TCIG is not entitled to possession. It asserts that the sums paid by the Appellant as and for mesne profits were paid and that having paid a further sum of US$5,499.72 it has tendered all sums due to TCIG under the Lease and is entitled to have the land transferred to it and sought declaration to that effect by counterclaim.

14.          At trial, the Learned Judge with the agreement of Counsel, identified the issues to be resolved:

(i)            Whether the Minister’s letter of 22 February, 2000 created an agreement for sale of the Land which obliged TCIG to transfer the Land on the payment of the monies reserved under the Lease, and if not,

(ii)           Whether the Defendant/Respondent is holding over on a statutory tenancy under Section 51 of the RLO on the same terms and conditions of the Lease including the right to purchase the Land.

15.          After a well reasoned judgment, the Learned Judge concluded that-

“the Defendant/Respondent is a purchaser in possession under an agreement for sale which has not been terminated and entitled to have the land transferred to it on the payment of US$51,500 and interest thereon

In coming to this conclusion, the Learned Judge rejected submissions by the Appellant that subsequent failure to pay rent would automatically bring an end to the contract for sale of land under which the Defendant had fully performed its obligation to build a service station at a cost of not less than $100,000 as part of the consideration for the transfer.

She concluded that the delay of seventeen (17) years in tendering the monies due under the agreement, while substantial, did not have the effect of terminating the agreement as time was not of the essence and TCIG has never served a notice to complete.

16.          It is that conclusion which formed the Order dismissing the Appellant’s application.

17.          Before us, the issue was reduced to the construction of the letter dated 22 February, 2000 received from the Minister, both parties agreeing that the interpretation would resolve the issue. The question that arises is whether the Minister’s letter (the letter) created a new contract between the parties, resulting in an acceptance by the Respondent that the land be transferred to it, on the “condition” that all arrears of rent would first be paid up by the Respondent.

18.          The Appellant, however, contends that the CPL was itself the contract for the sale of the land and that there was no commercial need for the parties to enter into a separate “commercial deal” for the sale of the land as “they had already done that”.

19.          Secondly, the Appellant contends that if the letter were a separate contract, it would have contained more details, and consequently the Court should construe it as part of the “government’s approach to the original”.

20.          This submission seems in conflict with the Appellant’s earlier contention that the Respondent had no right under the Lease to request the transfer of the land as it had lost that right when it did not pay the rent on time. In that context, it is difficult to come to any other view but that the letter disclosed a new agreement granting the transfer of the land to the Respondent on his performing his responsibility under that agreement to pay the arrears of rent.

21.          In so far as the contention that this letter did not contain sufficient details of the agreement, we accept the Respondent’s submission that both parties knew the terms of the CPL which was a standard policy. In addition, it was known to the Appellant that the Respondent had invested $100,000 in the development of the land, which must have formed part of the deliberation which led to the conclusion by the TCIG to grant the transfer of the land on the payment of the arrears.

22.          It was agreed by Counsel on both sides that where a document is clear and unambiguous it must be given the meaning that a reasonable person would have understood the parties to have meant.

23.          This principle was made clear by Lord Clarke of Stone-cum-Ebony JSC in delivering the judgment of the Court in Rainy Sky SA v Kookmin Bank (2011) 1 WLR 2900 at 2906 where he stated:

“For the most part, the correct approach to construction of the bonds as in the case of any contract, was not in dispute. The principles have been discussed in many cases, notably of course, as Lord Neuberger of Abbotsbury MR said in Pink Floyd Music Ltd. v EMI Records Ltd. (2010) EWCA Civ 1429, para 17, by Lord Hoffman in Mannai Investment Co. Ltd. v Eagle Star Life Assurance Co. Ltd. (1997) AC 749, passim in Investors Compensation Scheme Ltd. v West Bromwich Building Society (1998) 1 WLR 896, 912F-913G and in Chartbrook Ltd. v Persinmon Homes Ltd. (2009) AC 1101 paras 21 - 26. I agree with Lord Neuberger (also at para 17) that those cases show that the ultimate aim of interpreting a provision in a contract, especially a commercial contract, is to determine what the parties meant by the language used, which involves ascertaining what a reasonable person would have understood the parties to have meant. As Lord Hoffman made clear in the first of the principles he summarized in the Investors Compensation Scheme case (1998) 1MR 896, 912H the relevant reasonable person is one who has all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.’’

24.          It is unarguable that the Minster’s letter is anything else but clear and unambiguous. It approves the transfer of the land to the Respondent who of course was required to pay the arrears of the rent. The reasonable man with knowledge of the Conditional Lease Policy, and of the fact that the Appellant had already developed the land, would interpret the letter on the basis of the ordinary meaning of the words used therein.

25.          We agree therefore with the Respondent’s submission that the letter passed the equitable interest in the land to the Respondent, giving rise to the Respondent’s right to specific performance.

26.          However, in spite of the Minister’s letter, the Respondent made no payment of the arrears for a period of ten (10) years. The Appellant contends that the Respondent breached the contract, as the words of the letter implies immediate transfer of the land. The Respondent concedes that the non-payment of the arrears in accordance with the terms contained in the letter amounts to a breach of the contract but maintains that such a breach would only entitle the Appellant to damages. It contends that time was never made the essence of the contract and in any event, no notice of intention to terminate the contract was ever served on the Respondent, nor could it be contended that the Respondent’s conduct demonstrated that it had abandoned the contract as it continued to occupy the premises, operating the business of the Service Station, and in addition paid the mesne profits demanded of it by the Appellant.

27.          We agree that the letter created a purchaser/vendor relationship in the parties, transforming the earlier arrangement of landlord and tenant.

28.          In so far as the breach in the payment of the arrears, we agree that the Respondent’s conduct could be penalized in damages. This, the Learned Judge acknowledged and acted upon in awarding interest to be paid on the purchase price.

29.          The attempt by the Plaintiff to demand an increased price based on a new valuation of the land is without basis as the new contract (the letter) specifically referred to a purchase price of $51,500, the same price offered under the CPL.

30.          It should be noted that Mr. Phillips, Q.C., in argument before us on behalf of the Appellant, correctly conceded that if the Court found that the Minister’s letter contained a new contract between the parties, that the non-payment of the arrears, given the fact that time was not made the essence and that no notice to terminate had been served on the Respondent, would not result in automatic termination of the contract but that damages could be awarded as a result.

31.          In those circumstances and for the reasons stated above, the appeal is dismissed and the judgment and Order of the Court below affirmed.

32.          Since costs follow the event, costs of the appeal is awarded to the Respondent.

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Forte, JA

I concur.

___________

Zacca, P

I concur.

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Mottley, JA