the republic of trinidad and tobago in the high court...
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THE REPUBLIC OF TRINIDAD AND TOBAGO
IN THE HIGH COURT OF JUSTICE
CV 2012-02269
Between
DONRIDGE HEIGHTS LIMITED
Claimant
AND
GREENFIELD PROPERTIES LIMITED
1st Defendant
FREDERICK DONOWA
2nd
Defendant
VIGILIA BERNARD
3rd
Defendant
NEVILLE DONOWA
4th
Defendant
MARIA DONOWA
5th
Defendant
BEFORE THE HONOURABLE MR. JUSTICE PETER A.RAJKUMAR
APPEARANCES:
Ms. Asha Watkins-Montserin instructed by Ms. Jacqueline Chang for the Claimant
Mr. Navindra Ramnanan for the 2nd, 3rd and 5th Defendants
Mr. Joseph Sookdeo instructed by Mr. Lemuel Murphy for the 4th Defendant
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TABLE OF CONTENTS PAGE
BACKGROUND 3
ISSUES 4
o Whether the Actions of the First Defendant were as Agent of
the 2nd
to 5th
Defendants so as to be binding on them 4
o Whether the Development Agreement was in fact an agreement for the sale
of land to the first defendant by the second to fifth defendants 5
o Whether, under the Development Agreement, the first defendant had actual authority
to act on behalf of the second to fifth defendants in selling the 12 lots to the claimant
under the 2008 Sales agreements or whether the scope of the first defendant’s
authority was limited to sale of developed land only 7
o Whether the first defendant had apparent authority or appeared to be authorized,
or was held out as being authorized, to act as agent of the 2nd
to 5th
defendants
in selling lots under the 2008 Sales Agreements which had not yet been developed 8
ORDERS 10
ANALYSISAND REASONING 11
Law 11
The Documentary Evidence 13
Development Agreement dated 19th
May 2006 13
Sale Agreement dated 9th
June 2008 14
The 2006 Agreement 15
FINDINGS 19
CONCLUSIONS 22
ORDERS 23
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JUDGMENT
BACKGROUND
1. The second to the fifth named defendants are the children of Marion Donowa, who
passed away on September 23rd
1999, seised of a 70 acre parcel of land at St. Rose Estate,
Maraval, leaving portions of that parcel to them by will. (12 acres to Frederick, 10 acres to
Vigilia, 10 acres to Neville, and 12 acres to Maria.)
2. On 24th
January 2003, probate of her will was granted to Maria and Vigilia.
3. The second to fifth named defendants wanted to sell the land but had been unsuccessful
in so doing. They eventually entered into an agreement with the first named defendant dated 19th
May 2006, (the Development Agreement). Under that agreement the first named defendant was
to develop a 30 acre portion of the land and sell developed property to third party purchasers.
4. On 9th
June 2008 – the first named defendant entered into written agreements (the
written sale agreements) with the claimant for the sale of 7 lots, and on 29th
October 2008
entered into an oral agreement to sell a further 5 lots – together the 2008 Sale Agreements).
5. Under the 2008 Sale Agreements the claimant paid to the first defendant sums as follows-
i. 26th
May 2008 - $2,057,770.00
ii. 27th
October 2008 - $130,000.00
iii. 29th
October 2008 -$140,000.00
iv. 29th
October 2008 - $130,000.00
6. The first defendant was to develop these lots on or before December 31st 2009, which
period could have been extended by a further 9 months in the event of, for example, delay in
obtaining permissions for executing the infrastructural work.
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7. In fact the lots were not developed in accordance with the Sale Agreements and the
claimant sought the return of the monies it had paid.
8. It instituted action against the first named defendant as Developer, and also against the
second to the fifth named defendants, claiming that the Developer, in entering into the 2008 sale
agreements, was acting with their actual authority as their agent, or was held out as having
apparent authority from them, either rendering them liable for his default and breach of contract.
9. Under the written 2008 Sale Agreements – (clause 7) - the claimant was entitled to a
refund of monies paid with interest at the rate of 12% per annum.
10. Claimant claims that the Defendants owe the Claimant the total sums it paid to date to the
1st Defendant in addition to 12% contractual interest on the sums of $2,057,770.00 and
$400,000.00.
ISSUES
Whether the Actions of the First Defendant were as Agent of the 2nd
to 5th
Defendants so as
to be binding on them
11. The first defendant did not participate in the trial and default judgement was sought
against it. The second to fifth defendants deny that the first defendant, in entering into the 2008
Sale Agreements with the claimant, acted as their agent.
12. The fourth defendant was separately represented. Neville Donowa’s contention was that
the first defendant had no authority to sell land which had not been developed because the first
defendant’s authority under the 2006 agreement was to sell developed land only.
13. Maria Donowa on behalf of defendants two, three and five, contended that the first
defendant was not their agent at all, as the Development Agreement was actually an agreement
for the sale of land to him. Thereafter his dealings with it were for his own account.
14. It is essential therefore to analyse the Development Agreement to ascertain:-
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a. Whether, as contended, the Development Agreement was in fact an agreement for the
sale of land to the first defendant by the second to fifth defendants, and/or;
b. Whether, under the Development Agreement, the first defendant had actual authority to
act on behalf of the second to fifth defendants in selling the 12 lots to the claimant under
the 2008 Sales Agreements, or whether the scope of the first defendant’s authority was
limited to sale of developed land only, and/or;
c. Whether the first defendant had apparent authority or appeared to be authorized, or was
held out as being authorized, to act as agent of the 2nd
to 5th
defendants in selling lots
under the 2008 Sales Agreements.
Whether the Development Agreement was in fact an agreement for the sale of land to the
first defendant by the second to fifth defendants
15. It was contended that:
a. the 2006 agreement, under which they were to receive a payment representing the value of
the undeveloped land, together with 55 % of the net profit after deducting costs of
development, was a Sale Agreement to the developer. A conveyance of the land to him
had not been executed so as to remove the need for upfront payment of stamp duty, as in
any event the lots were to be transferred on sale to third parties after they were developed;
b. that they had been paid sums of $250,000.00 each;
c. that as the first defendant executed the written 2008 Sale Agreements with the claimant as
beneficial owner, this established or evidenced that the prior 2006 development
agreement was one for the sale of the land to the first defendant; and
d. accordingly the developer could not have been acting as their agent as they had simply sold
the land to him, and he was the beneficial owner, acting on his own behalf in subsequently
selling lots to the claimant.
16. This argument is curious, and takes the second to fifth claimants no further. The assertion
that the development agreement was actually an agreement for the sale of the land to the
developer /first defendant, who was not therefore their agent, carries with it the risk of not
permitting them to resist the Claimant’s claim for specific performance of the sales agreements
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against the first defendant. This follows if in fact they had agreed to divest themselves of the
entire parcel to the first defendant, even without having received payment in full for it.
17. If, as they contend, the land had been sold to the developer, but they had not been paid in
full for it, then the claimant would be entitled to claim as it does, against the first named
defendant, the developer, for specific performance of the sale agreements for the 12 lots it had
purchased. The second to fifth defendants, no longer being the owners of the land, could hardly
resist that claim, even though they had not been paid in full for the land. As the land was not
developed and there is no evidence of subdivision with planning approvals, this would present
practical difficulties if ordered.
18. On the other hand they would, if successful on this scenario, be in a position to contend that
the first defendant, having purchased their land, could not be their agent. If the first defendant
were in breach of the 2008 Sale Agreements with the claimant, the claimant could not claim
against these defendants for recovery of its monies paid to the developer, as the developer would
not be their agent.
19. In fact this distinction, raised as an afterthought for the purpose of a defence to the claim of
the claimant, was simply not an issue beforehand.
20. The 2006 agreement did not transfer the interest of the second to fifth defendants in the
land to the developer. The contention that he could not be their agent under the 2006 agreement
because he had actually become the owner or beneficial owner of the land, and was therefore
acting entirely on his own behalf in selling lots therefrom, is therefore simply not sustainable.
More so as this argument involves accepting that the defendants 2 to 5, actually had agreed to
divest themselves of their interest in 30 acres of land while receiving only $1 million dollars of
an unascertained price of the undeveloped land. (The land had not been valued in its
undeveloped state. It appears that the further payments to them, contemplated under the
Development Agreement, for the value of the land in its undeveloped state, plus profits when
developed, had not been made).
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21. It is not clear whether attorneys for the defendants, in seeking to evade liability to the
claimant, appreciate that the effect of their argument taken to its illogical conclusion could be:-
a. that the defendants two to five could be divested of their right title and interest in the entire 30
acres of land, with the first defendant becoming the beneficial owner thereof, despite their not
having been paid in full for it, and
b. that the claimant could seek to enforce against first named defendant in default of defence, the
claimant’s claim to specific enforcement of its agreements for sale of 12 lots of that land.
Whether, under the Development Agreement, the first defendant had actual authority to
act on behalf of the second to fifth defendants in selling the 12 lots to the claimant under
the 2008 Sales agreements or whether the scope of the first defendant’s authority was
limited to sale of developed land only
22. The agreements for sale in 2008 contemplated that the land would be developed by
December 31 2009, or if not, by a period extended therefrom by a further 9 months.
23. If the developer had complied with its obligations under the sale agreements then he would
have been selling developed land, and been unquestionably acting within a scope of authority
expressly conferred by the 2006 agreement.
24. However even if he sold undeveloped land I find that this was not, and could not, have
been a surprise to the second to fifth defendants. They were aware that the developer did not
have enough money to purchase the land from them outright. They were aware that their share in
the profits of the developed land would only come after the land had been developed. It must
have been within their contemplation that the developer, who did not have enough money to buy
the land outright, may have had to resort to selling lots to finance development works.
25. Maria in fact acknowledges that the developer’s financing would depend on when he got a
sale, that he did not have the money to purchase the lands prior to embarking upon the
development project , and that he would pay them when he got income from selling the property.
– see paragraphs 7, 8, and 9 of her witness statement.
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26. It is doubtful whether he had actually exceeded his authority by selling then undeveloped
lots, as he was in fact selling lots that were, under the Sales agreements, to have been developed
by December 31st 2009. This was clearly within the scope of the Development Agreement as the
lots being sold and paid for were not lots that were to remain undeveloped. They were in fact
sold as lots shortly to be developed- lots under, or in the process of, development. The fact that
the Developer was fortunate enough to have secured a sale of those lots before the development
and infrastructural works had been completed certainly does not mean that the Developer
exceeded his authority. The Development Agreement expressly conferred authority on him to
develop the Owners’ land with a view to its sale. He was to finance the development. Under the
Sales Agreements he received payment for lots of the owners’ land in anticipation of, and in
advance of the development.
27. I find that the Developer did not exceed his authority in selling undeveloped lots as:
a. it was contemplated that the lots would have been developed by the time of completion of sale;
b. the second and fifth defendants did not object. They were primarily concerned to receive
payment for their land;
c. Sale of lots, developed or not, was one mechanism that could reasonably have been, and
actually was, contemplated for financing the development project;
d. the Developer was clearly acting on his own behalf and on behalf of the second to fifth
defendants in taking steps under the 2006 agreement that would have enabled him to further the
development and arrange financing of the development for their joint benefit;
Whether the first defendant had apparent authority or appeared to be authorized, or was
held out as being authorized, to act as agent of the 2nd
to 5th
defendants in selling lots under
the 2008 Sales Agreements which had not yet been developed
28. The fact is that the first defendant would not have been in a position to obtain millions of
dollars from the claimant were it not for the fact that the second to fifth defendants cloaked him
with the authority to deal with and even to dispose of portions of their land.
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29. Even if they became aware of the agreements for sale after the fact, it is undisputed that
they did so become aware.
30. There is no evidence that they at any time objected to the agreements for sale, or
complained that the developer could not have entered into those agreements because they were
of undeveloped land as opposed to developed land, even when some of them were present at
meetings subsequently at which the fact of sales to the claimant must have been raised.
31. Whatever the reason for the developer selling lots, they raised no objection to the fact that
undeveloped lots were being sold. They attended meetings and there is no evidence that this was
a concern expressed by any of them, (save that the 4th
defendant says that he attended no
meetings with the claimant and he was unaware).
32. The effect of this was that the developer was held out as having apparent authority to sell
the lots to the claimant:-
a. By the development agreement – which though it authorized him to sell developed lots , did
NOT restrict him to selling only developed lots
b. By the defendants simply not raising this as an issue at their meetings with the claimant.
Even if they only attended such meetings after the 2008 agreement had been executed they
must have been aware that 12 lots from their land had been sold. Yet they made no
objection, implicitly ratifying the authority of the developer to enter into those agreements,
even if he had initially exceeded his authority.
33. The defendants wanted money from the sale of their land. In fact, most curiously, they
even claim to have been under the impression that the 2006 agreement had been for the sale of
their land, all 30 acres of it. This however ignores the fact that under that agreement they
continued to have responsibilities to the developer. For example, they were to provide him with
legal instruments as necessary, and even to assist in perfecting their title, which at that point was
sufficiently imperfect to have hampered sales to third parties.
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34. The presence of any of the defendants at meetings with the claimant and the developer in
such a scenario where they had divested themselves of ownership of the land is not reasonably
explicable solely on the basis that these defendants simply wanted the rest of their money.
35. The discussion at such meetings centered around giving control of the development of the
land to the claimant. Obviously the second to fifth defendants were recognized as retaining
sufficient control over the land as to have a role to play in that proposal.
36. They cannot claim that they knew nothing, saw nothing, and are responsible for nothing,
when it was the Development agreement, under which they took the benefit of payment that
empowered the first defendant to purport to sell land to the claimant.
37. Without that agreement, which was for the joint benefit of all the defendants, the claimant
would not have parted with its funds.
38. The first defendant was their agent in developing the lands as they had an interest in the
profits from the developed lands over and above the value of the land in its undeveloped state.
Their rights responsibilities, obligations and benefits, did not end upon their executing the 2006
agreement. In fact they were, for example, under a duty to execute transfers to purchasers of
developed lots and all other necessary legal documents required by the developer.
39. I find that the second to fifth defendants clothed the developer with apparent authority to
sell their land, and subsequently effectively ratified, by the presence of some of the owners at
meetings with the Claimant, any possible exceeding of that authority by the developer’s sale of
undeveloped lots.
ORDERS
40. The Defendants are to pay to the Claimant:
a. Damages for breach of contract in the sum of $2,057,770.00.
b. Damages for breach of contract in the sum of $400,000.00.
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c. Contractual interest on the sum of $2,057,770.00 calculated at a rate of 12% per
annum from May 26th
2008 to October 31st 2014.
d. Contractual interest in the sum of $400,000.00 at the rate of 12% per annum from
October 29th
2008 to October 31st 2014.
e. Costs on the basis prescribed by the Civil Proceedings Rules for a claim in the total of
the above amounts.
ANALYSIS AND REASONING
LAW
The effect of Actual Authority
41. Halsbury Laws of England 5th
ed Volume 1
“125. Rights and liabilities of principal
As a general rule, any contract made by an agent with the authority of his principal may
be enforced by or against the principal where his name or existence was disclosed to
the other contracting party at the time when the contract was made.
Apparent (or ostensible) authority
42. Bowstead on Agency 18th
Edition at pages 335-336 at paragraph 8-013 states:-
“Where a person, by words or conduct, represents or permits it to be represented that
another person has authority to act on his behalf, he is bound by the acts of that other
person with respect to anyone dealing with him as agent on the faith of any such
representation, to the same extent as if such other person had the authority that he was
represented to have, even though he had no actual authority”.
43. In Freeman and Lockyer v Buckhurst Park Properties (Magnal) Ltd [1964] 2 QB
480 at 502-503:-
“It is necessary at the outset to distinguish between an "actual" authority of an agent on
the one hand, and an "apparent" or "ostensible" authority on the other. Actual authority
and apparent authority are quite independent of one another. Generally they co-exist and
coincide, but either may exist without the other and their respective scopes may be
different. As I shall endeavour to show, it is upon the apparent authority of the agent that
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the contractor normally relies in the ordinary course of business when entering into
contracts.
An "actual" authority is a legal relationship between principal and agent created by a
consensual agreement to which they alone are parties. Its scope is to be ascertained by
applying ordinary principles of construction of contracts, including any proper
implications from the express words used, the usages of the trade, or the course of
business between the parties. To this agreement the contractor is a stranger; he may be
totally ignorant of the existence of any authority on the part of the agent. Nevertheless, if
the agent does enter into a contract pursuant to the "actual" authority, it does create
contractual rights and liabilities between the principal and the contractor……
An "apparent" or "ostensible" authority, on the other hand, is a legal relationship
between the principal and the contractor created by a representation, made by the
principal to the contractor, intended to be and in fact acted upon by the contractor, that
the agent has authority to enter on behalf of the principal into a contract of a kind within
the scope of the "apparent" authority, so as to render the principal liable to perform any
obligations imposed upon him by such contract. To the relationship so created the agent
is a stranger. He need not be (although he generally is) aware of the existence of the
representation but he must not purport to make the agreement as principal himself. The
representation, when acted upon by the contractor by entering into a contract with the
agent, operates as an estoppel, preventing the principal from asserting that he is not
bound by the contract. It is irrelevant whether the agent had actual authority to enter
into the contract.
In ordinary business dealings the contractor at the time of entering into the contract can
in the nature of things hardly ever rely on the "actual" authority of the agent. His
information as to the authority must be derived either from the principal or from the
agent or from both, for they alone know what the agent's actual authority is. All that the
contractor can know is what they tell him, which may or may not be true. In the
ultimate analysis he relies either upon the representation of the principal, that is,
apparent authority, or upon the representation of the agent, that is, warranty of
authority.”
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44. In Hely-Hutchinson v Brayhead Ltd. and Another [1967] 3 All ER 98 at 104, Lord
Wilberforce considered Diplock LJ's judgment in Freeman & Lockyer v Buckhurst Park
Properties (Mangal) Ltd ([1964] 1 All ER at p 647, [1964] 2 QB at p 502.
45. In Bowstead on Agency 18th
Edition at page 337 paragraph 8-017 it is stated:-
“There must be a representation, or in Restatement, Third terms a manifestation. This
seems to occur in three main ways. It may be express (whether orally or in writing); or
implied from a course of dealing; or it may be made by permitting the agent to act in
some way in the conduct of the principal’s business with other persons.”
THE DOCUMENTARY EVIDENCE
Development Agreement dated 19th
May, 2006
46. Clause 1 of the Agreement is as follows:
“1. a) In August 2005, The Owners negotiated with the Developer, to develop 30 acres
more or less…
Clause 2 (a) states that “the Owners shall make the property available to the developer
for development”.
47. By Sub-clauses (d) – (f) The First Defendant was required to:-
i. secure financing for the execution of the entire project
ii. execute the development works for phase 1
iii. manage, market and enter into sale agreements with willing purchasers for the developed
property in respect of Phase 1.
48. Clause 4 (Compensation for the Owners) provides as follows:
“A sum of money equivalent to the market value of the land in its present undeveloped
condition
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55% of all net profits realized from the sale of the developed property after all costs
associated with the development and sales have been accounted for and deducted and the
accounts have been certified by qualified independent accountant …”
Sale Agreement dated 9th
June, 2008
49. This Agreement is as follows:
“The Vendor, being a development company, has entered into an agreement with the
legal owners of the parcel of land described in the First Schedule hereto (hereinafter
called “the Development Property”) to develop the Development Property into
residential and institutional building lots as a leasehold building scheme and to enter
into sale agreements with willing purchasers and under the terms of the said agreement
the owners have agreed to execute the required deeds and instruments to demise
leasehold interest of the lots to the purchasers. The Purchaser has had sight of this
agreement and is aware of its contents.” (emphasis added)
50. At clause D:
“The Vendor also proposes to incorporate a company (hereinafter called “the
Company”) to act as a service company for the Development Property providing the
services set out in Schedule 4 of the Draft Lease (hereto attached and marked “A” and
signed by the parties hereto for the purpose of identification) and the Vendor will cause
the Owners to convey the freehold reversion in the Development Property to the
Company after leases in respect of all the lots have been granted.”
51. Clauses 5 and 7 are as follows:
“5. The Vendor shall complete or procure the completion of the Infrastructural Works
on or before the 31st day of December 2009 which date may be extended by a period of
nine months for any delay caused by reason of…
7. If for any reason whatsoever the date for the completion of the Infrastructural Works
specified in clause (8) above is extended for any period expiring more than nine (9)
months after such date the Purchaser shall have the option to determine this Agreement
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upon giving the Vendor fourteen (14) days notice in writing to that effect whereupon all
monies paid by the Purchaser to the Vendor shall be refunded and repaid to the
Purchaser by the Vendor with interest at the rate of twelve per cent (12%) per annum
from the date of payment thereof by the Purchaser until final repayment to the
Purchaser.”
52. No infrastructural works had been completed by December 31st 2009 or by September
30th
2010.
The 2006 agreement
53. The 2006 agreement lacks the detail and specificity that would be expected in an
agreement where millions of dollars in value was at stake. Nevertheless its structure is clear.
a. The second to fifth defendants were to be paid for the land - the value of the land in its
undeveloped state, plus 55% of the further profits realized by the development and
subdivision of the land.
b. The second to fifth defendants would seek inter alia, to obtain the necessary
documentation of their title, and would participate in conveyances to third party
purchasers of developed lots.
c. The developer bore the responsibilities for financing the development, making payments
to the second to the fifth named defendants for the value of the land, and finding third
party purchasers for the developed lots.
d. Nowhere in the agreement does it stipulate that the second to the fifth defendants divested
themselves of such title that they may have had or may have come to possess, or that they
transferred ownership to the first defendant developer. The development agreement refers
to a development, developers and a project.
e. Further the agreement was clear that the land was to be developed, but was not specific
as to how the development was to be financed.
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f. The fifth defendant acknowledged that the developer was not in a position to pay them in
full for the land. She asserted that that was one of the reasons why, although beneficial
ownership allegedly passed to him under the 2006 agreement, there was no conveyance
to him.
g. In fact the development agreement does not make it clear that beneficial ownership
was ever transferred to the developer.
54. The 1st Defendant was liable to pay a fixed ascertainable price for the purchase of the
land as set out in the development agreement under the heading “Compensation for the Owners”.
This was the base sale price of the undeveloped land plus 55 % of the net profit after the land
was developed.
55. The agreement was clearly not simply an agreement for the sale of the land. It was a
business arrangement under which the second to fifth defendants would be paid for their land
and would eventually benefit from the enhanced price that lots would realise when the land was
developed.
56. They were not strangers to the agreement - they knew that the land would be sold onto
third parties when developed. In fact it is clear that they also condoned and ratified the sale of
then undeveloped lots to the claimant, in anticipation of such eventual development.
57. The lots sold to the claimant were not sold without their knowledge. The presence of
some of the owners at meetings with the claimant, whether before or after the sale of land to the
claimant, would have led a reasonable purchaser like the claimant,
a) to form the view that they approved of or accepted the sale, and
b) that they recognised the authority of the first defendant to effect the sales to the claimant,
even of undeveloped land.
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58. The sale of undeveloped land, particularly as it was anticipated in the written sales
agreement that the land would be developed within a defined time frame, was merely an
extension of the authority that they had expressly conferred on the first defendant to sell
developed land.
59. There is no reason to doubt the claimant when it testifies that the second to fifth
defendants – (except for the fourth), were present at meetings where the sale of land to it had
been discussed, as:-
a) the fact of ownership by those defendants was adverted to in the 2008 agreement,
(Clauses a and d), and ,
b) the 2006 development agreement was also expressly referred to in that 2008 agreement.
60. The claimant therefore had very good reason to involve the owners in any discussions
that became necessary as a result of delay in the first defendant’s development of the land, more
so as the issue had been raised that it may have been the result of the inaction on the part of the
owners that the approvals for the development of the land were being delayed.
61. It is not necessary to address whether that was or was not the case. It is simply one more
reason why it is more plausible than not that the owners would have been at meetings with the
claimant at which they would clearly have become aware that the claimant had purchased lots of
the land from the first defendant and had paid significant sums for those lots.
62. At no time did any one of the owners protest that the first defendant did not have their
authority to do so.
63. Their attendance at such meetings, or any meetings, far less meetings where the
discussions involved appointing the claimant as developer in place of the first defendant, is
completely inconsistent with their having divested themselves of ownership of the land to the
first defendant.
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64. Clearly they still had a level of control via their ownership of the land and this was
recognised by all concerned – the claimant – the first defendant and the second to fifth
defendants themselves – (except for the fourth who claims not to have attended any of those
meetings and to have been kept out of the picture once he had signed the Development
Agreement). The fact, however, is that he did sign the development agreement.
65. The second to fifth defendants could not:-
a. permit the first defendant to deal with their land,
b. permit the first defendant to collect money from its sale,
c. expect to benefit from that money
i. by being paid from it directly ,or
ii. by having it used for the development and enhancement of their land, from
which they were to derive profit, and
d. make no protest that he was not authorised to do so,
yet then deny liability when the first defendant did not perform his obligations under the
agreement with the purchaser claimant despite receiving over $2 million..
66. In agreeing to develop the land the first defendant was clearly acting on his own behalf as
well as on behalf of the second to fifth defendants, for the benefit of all the defendants –
including the fourth defendant who had signed the development agreement. His sale of the
land to the claimant was predicated on that agreement to develop the land, and that agreement
and obligation is referenced in the agreement for sale of lots to the claimant.
67. It is beyond dispute that the owners, the second to fifth defendants, were fully aware of
that 2006 agreement which they all signed. By that agreement they:-
a) expressly authorised the first defendant to sell developed lots of their land, and
b) expressly authorised him to develop lots of that land.
68. The existence of that agreement enabled him to sell lots of land to third parties in
anticipation of the development works on the land being completed within a defined time frame,
and, on that basis, accept money in advance of the development works being completed.
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69. There is no express restriction on the first defendant’s selling undeveloped lots. Without
express and specific wording in the 2006 agreement it is not possible to construe it as divesting
the right, title, or claim to an interest in or ownership of the land, of the second to fifth
defendants especially to the first defendant, who never paid in full the amounts that he contracted
to pay under the 2006 agreement.
70. Neither is it possible to construe it as divesting the 2nd
to 5th defendants of all
responsibility to third party purchasers who purchased on the basis of the representation in the
2006 development agreement that:-
a. the owners had authorized the developer to develop their land
b. the owners had authorized the developer to sell lots in the proposed development.
FINDINGS
71.
a. Whether the second to fifth defendants or any of them were present at meetings
between the claimant and the first defendant.
The fourth defendant claims that he was never present at any meetings between the
claimant and the first defendant.
Maria claims that though she was present at at least one meeting between the claimant
and the developer, she was not a party to any agreements between them.
The claimant claims that Frederick was present at meetings between the claimant and the
developer. Frederick was not in a suitable mental or physical condition to testify at trial
and therefore was not in a position to refute that he was present.
The Claimant’s witness explained that Frederick Donowa was present when the
money was paid by the Claimant to Greenfield.
The Claimant’s witness stated that between July and September, 2009, the Claimant had
several meetings with Howard John of Greenfield, its C.E.O. and representatives of the
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Donowas, mainly the Second Named Defendant Frederick, three times with the Fifth
Named Defendant, Maria , once with the Third Named Defendant Vigilia, and never with
the Fourth Named Defendant, Neville.
It is not disputed that Maria and Frederick were present at such meetings. Maria admits
being present at at least one. I accept the claimant’s evidence that Frederick was present
at several such meetings. I am prepared to accept the evidence that Neville was not
present at any such meeting, and that Vigilia may have been present at at least one such
meeting.
I find however that even if they were not all present at all, or even if they were not
present at any such meetings, they had signed the Development agreement, and it was
the existence of that agreement and its terms which empowered and authorized the First
named defendant to sell the lots as he did to the Claimant.
b. Whether they were aware of the agreements for the sale of 12 lots to the claimant.
I find it makes little difference whether they knew of the Sale Agreements at the time
they were entered into, or only subsequently became aware of them.
The fact is that the presence of some of the Defendants at meetings thereafter, makes it
far more likely than not, on a balance of probabilities, that they did come to know of
those sale agreements, and none of them protested that those agreements were beyond
the scope of the authority of the First defendant.
Their evidence is that, one and all, their concern was receiving payments. The only way
they could receive payments was if the land was being sold. Whether developed,
undeveloped, or while under development, it simply did not matter to them at the time.
c. Whether they objected to the sale of the then undeveloped lots to the claimant by the
first defendant.
They do not claim to have done so and I find that they did not.
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d. Whether they or any of them received monies from the sale of the lots to the
claimant.
I find that it does not really matter, as monies from the sale of land, even if not passed
directly to the second to fifth defendants, was to be used to develop the land under the
Development agreement, and therefore benefit them indirectly. As the owners were to
receive 55 % of the net profits from the developed land, under the development
agreement they were to benefit from any monies paid by the Claimant.
On a balance of probabilities however, it is more likely than not that the money that was
distributed to the Second to the Fifth defendants actually came from the sale of lots to the
claimant. The suggestion that attorney’s letter made it clear that they had been paid much
earlier, in accordance with the terms of what was supposed to be the payment schedule in
the Development agreement, is not sufficient to find that this was what actually
happened.
The reality was that the First defendant could not pay for the land as Maria admits, unless
he secured sales of portions of the land, or secured financing. There is no evidence that he
secured any such financing, or given the state of title of the land, was even in a position
to do so. (In fact Neville’s evidence is that the lands were not vested in them, even
though the beneficiaries all signed the development agreement) it is therefore likely that
the defendant / owners actually received payment, either wholly or partially, when the
Claimant paid the First defendant.
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CONCLUSIONS
72.
i. The 2006 agreement did not transfer the interest of the second to fifth defendants in
the land to the developer. The contention that he could not be their agent under the
2006 agreement because he had actually become the owner or beneficial owner of the
land, and was therefore acting entirely on his own behalf in selling lots therefrom, is
therefore simply not sustainable.
ii. I find that the Developer acted within his actual authority and did not exceed his
actual authority in selling undeveloped lots as:
a. it was contemplated that the lots would have been developed by the time of
completion of sale;
b. the second and fifth defendants did not object. They were primarily concerned to
receive payment for their land;
c. Sale of lots, developed or not, was one mechanism that could reasonably have
been, and actually was, contemplated for financing the development project;
d. the developer was clearly acting on his own behalf and on behalf of the second to
fifth defendants in taking steps under the 2006 agreement that would have enabled
him to further the development and arrange financing of the development for their
joint benefit;
iii. I find that the second to fifth defendants clothed the developer with apparent authority
to sell their land, and subsequently effectively ratified, by the presence of some of the
owners at meetings with the Claimant, any possible exceeding of that authority by the
developer’s sale of undeveloped lots.
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ORDERS
73. The Defendants are to pay to the Claimant
i. Damages for breach of contract in the sum of $2,057,770.00.
ii. Damages for breach of contract in the sum of $400,000.00.
iii. Contractual interest on the sum of $2,057,770.00 calculated at a rate of 12% per
annum from May 26th
2008 to October 31st 2014.
iv. Contractual interest in the sum of $400,000.00 at the rate of 12% per annum from
October 29th
2008 to October 31st 2014.
v. Costs on the basis prescribed by the Civil Proceedings Rules for a claim in the total of
the above amounts.
Dated the 31st day of October, 2014
Peter A. Rajkumar
Judge.