Mowry v Payne et Al

• Jurisdiction: Montserrat
• Court: Court of Appeal (Montserrat)
• Judge: D'Auvergne J.A.,Matthew J.A.
• Judgment Date: 17 September 2001
• Neutral Citation: MS 2001 CA 1
• Docket Number: Civil Appeal No. 2 of 2000
• Date: 17 September 2001

Mowry

and

Payne et al

Redhead, J.A.; Matthew, J.A.; D'Auvergne, J.A. (Ag.)

Civil Appeal No. 2 of 2000

Court of Appeal

Contract - Sale of property — Rescission — Whether available — Appellant appealed decision of trial judge refusing appellant's claim for rescission of an agreement to purchase and ordering 2nd respondent to specifically perform the said agreement — Whether judge erred in law in not holding that the failure of the respondents to disclose a debenture charge to the appellant on or before the signing of the agreement entitled the appellant to avoid the agreement and was a valid defence to the counterclaim for specific performance — Whether judge erred in ordering specific performance against the party seeking the order — Whether judge erred in not awarding the plaintiff damages in lieu of rescission of the agreement for defect of title — Whether appellant entitled to rescind contract on basis of fraudulent concealment or non-disclosure of debenture — Whether appellant exercised option to rescind contract within reasonable time — Finding that appellant lost right to rescission through delay — Appeal dismissed and decision of trial judge affirmed — No order as to costs.

Appearances:

Mr. Jean E. H. Kelsick for the appellant.

Mr. Karl Markham for the first and second respondents.

1 D'Auvergne J.A. [Ag.]: The Appellant dissatisfied with the decision of Saunders, J. delivered on the 20 ^th of June 2000 whereby he refused the Appellant's claim for rescission of the agreement to purchase and ordered the second named defendant to specifically perform the said agreement, appealed and after amending his notice of appeal filed the following:

1

The learned Judge erred in law in granting the Second Defendant an order of specific performance having regard to the fact that the First and Second Defendants were guilty of fraudulent concealment. 2. The learned Judge erred in law in not holding that the failure of the Defendants to disclose the debenture charge to the Plaintiff on or before the signing of the Agreement entitled the Plaintiff to avoid the Agreement and was a valid defence to the counterclaim for specific performance. 3. Further, the learned Judge was wrong to and could not order specific performance against the party seeking the order i.e., the vendor/Second Defendant. 4. The learned Judge erred in law in not awarding the Plaintiff damages in lieu of rescission of the Agreement for defect of title. 5. The learned Judge was wrong in faulting the Plaintiff for giving notice of rescission by his writ and for seeking in his pleadings a declaration of the Court that the Agreement be rescinded, for the following reasons: (a) there is no need to precede a writ claiming rescission by a written notice claiming rescission; (b) the Plaintiff was entitled to give notice of rescission by his writ; (c) given that the purchase monies had already been paid when the concealment was first discovered, this was a case in which it was necessary for the Plaintiff to seek the assistance of the court in rescinding the Agreement and recovering his money.

6

Alternatively, the learned Judge erred in law in not holding that by the letter dated 17th June, 1997 form Kelsick & Kelsick to Payne, the Plaintiff had made no election and that by the issue of the writ of summons he elected to rescind the Agreement. 7. The learned Judge erred in law in not holding that the letter dated 17th June, 1997 written by Kelsick & Kelsick to the First and Second Defendants was a notice to make time of the essence and so a condition of the Agreement on breach of which the plaintiff was entitled to sue for damages. 8. The learned Judge erred in finding that the Plaintiff delayed too long in taking steps to rescind the Agreement and/or in issuing his summons, bearing in mind the conditions prevailing in Montserrat at the time and the fact that he excused the First and Second Defendants' delay in perfecting title, after being put on notice by the Plaintiff's solicitors to do so, on the basis of those very conditions. 9. There being no evidence that the Plaintiff was motivated by opportunism the learned Judge was wrong in drawing such an inference from the facts and consequently his decision was founded partly on speculation, thereby rendering it unsound.

FACTS

2 The Appellant is a retired psychologist who after working for many years in Indonesia decided to retire on the island of Montserrat. In 1993, while holidaying on the Island a block of Condominiums owned by the second named Respondent (herein called the Company), which was and is still being managed by the first named Respondent, David Payne, the principal director and majority shareholder of the Company, (hereinafter called Payne) caught his interest.

3 Discussions ensued between the Appellant and Payne and it was agreed that the Appellant would purchase an unfurnished condominium unit for the price of U.S.$68,000.00.

4 Consequently, on the 4th of January 1994 a Purchase Agreement was signed by the Appellant and Payne at the office of the third named Respondent, a Barrister at Law.

5 The Agreement required the Appellant to pay a deposit of U.S.$18,000.00 and to complete payment within six months. At that same visit to the third named Respondent's office, Payne requested the third named Respondent to prepare an Alien Land Holding Licence for the Appellant, who paid a sum of money to cover the expenses and fees in obtaining the licence.

6 It appears that the Appellant was ignorant of all that was entailed in an alien purchasing real estate in Montserrat and erroneously thought that the Land Holding Licence was actually his Document of Title. The Appellant returned to Indonesia and continued working until the month of June 1994 when he returned to Montserrat and entered into occupation of the condominium which was by then, fully paid.

7 Sometime after the Appellant's return to Montserrat he received his Alien Land Holding Licence from the third named Respondent. It was a single sheet of paper which bore the date “12th October 1994” and was signed by the Governor, whereupon the Appellant asked “Is this it?” and third named Respondent replied, “That is your Alien's Land Holding Licence.”

8 A material aspect of this case is that, on the 24 ^th day of January 1986 the company executed a debenture in favour of the Royal Bank of Canada (hereinafter called the Bank). It secured two sums of E.C.$50,000 to be loaned to the Company by way of a floating overdraft. It created a draft on all the Company's property including the freehold parcel of land measuring 1.93 acres registered in the Register of Titles of Montserrat as block 7/2 Parcel 7 of Elberton Registration Section and all those tenements situate thereon.

9 It is also to be noted that there was no provision in the debenture for transfer of any part of the property charged or in respect of repayment of any sums loaned and the interest thereon.

10 It is to be specifically noted, that at no time, neither before, at the time of, or after the signing of the Agreement was the Appellant informed by Payne of the existence of the debenture; also that on Payne's instructions the Appellant paid the deposit to Payne, personally, on the 4th January 1994, and the balance of the purchase price on the 13 ^th June 1994 to Payne's personal bank account at a bank in the United States of America.

11 As stated earlier the Appellant entered into occupation of the said condominium and was on very friendly terms with Payne who loaned him some furniture until his own arrived.

12 Now, the Appellant having received the Alien Land Holding Licence which authorized him to own Parcel 12-14 block 7/2 in the registration section of Woodsville, thought albeit, erroneously, that he was the owner of the said condominium. He hired a carpenter to do repairs, paid maintenance fees and also, insurance, water, electricity and telephone rates on the property.

13 In May 1997 the Appellant's suspicions were aroused as he was not paying property tax. He had discussions with Payne and found out that many unsold condominiums were mortgaged. He called the third (3 ^rd) named Respondent regarding the title to his condominium who informed him that the licence was not his title but gave him a document relating to the transfer of the condominium which he signed and paid for. The following day the third named Respondent made a search at the land registry and discovered the debenture charge. He promptly informed the Appellant and advised him that before the registration of the title could be done, the encumbrance would have to be removed after which he, the (third Respondent) would prepare the transfer. Payne was informed of the discovery.

14 The Appellant was dissatisfied with the progress of the third Respondent on the matter so he terminated his services and engaged Kelsick & Kelsick as his new attorneys.

15 On the 17 ^th day of June 1997 Kelsick & Kelsick wrote a letter to Payne in which the following were stated:

• (a) that the failure to mention the Debenture in the Agreement was a misrepresentation of contract on the part of himself and the other officer of the Company who had executed the contract;

• (b) that if under the terms of the Debenture the Bank's consent to the transfer of the unit (the Condo) was required then the sale was in violation of the debenture;

• (c) that despite payment of the proof of purchase price and Sergeant's charges in full almost three years ago was still without title.

  The letter concluded as follows:

  “We are to inform you that unless a land certificate in favour of our client regarding the said unit is delivered to our officer by 27 ^th instant further action will be taken in this matter”.

16 The Appellant's evidence was that he left the condominium “just after the big explosion that killed people” (This was the latter part of 1997). He said “I would have...