Court of Appeal
Civil Appeal No. 4 of 1990
25 and 26 September, 1990, 8 February, 1991.
KENNETH ST. L. HENRY, P.
NICHOLAS J.O. LIVERPOOL, J.A.
SIR DENIS E.G. MALONE, J.A.

Mr. E. Courtenay for the Appellant Mary Ann Boggess
Mr. V. H. Courtenay, S.C. for the Appellant Anthony P. Leonard
Mr. E. Flowers, S.C. for the Respondent Badder Hassan

Contract - Partnership - Whether a partnership can exist in the absence of a formal arrangement (in writing) - How are the terms of an informal partnership ascertained - What constitute partnership property and how is it ascertained - When is a partnership illegal - Whether an offer sale of share of partnership assets which omits several key elements enforceable as a valid offer capable of acceptance and liable to be the subject of specific performance - What is the effect of Non-Registration of a registrable interest in Belize - Whether a purchaser with notice of a third party rights (though not registered but who is in possession) will be a bona fide purchaser without notice.

J U D G M E N T

LIVERPOOL, J .A.

Mary Ann Boggess (the First Appellant) a farmer and rancher resided in Hereford, Texas. She was involved in farming in the United States of America before she came to Belize in 1971. On her arrival she bought a farm known as Rancho Grande. She also purchased a further 25 acres of land on which there was a dwelling house, and another building which was used for the purposes of a restaurant/bar/dance floor. Her third acquisition some six or seven years later was another farm of 162 acres. All those properties were purchased with her own funds.

Soon after her arrival in Belize the First Appellant met the Respondent, they developed a relationship and were very soon living together. They also began to work the Rancho Grande farm together. The First Appellant says it took them 5 years to clear that part of the ranch land that was not cleared. They had it fenced and planted pastures. When the Rancho Grande was purchased there were 214 heads of cattle and 21 horses. The First Appellant provided some items of equipment to establish the ranch. These consisted of a Massey Ferguson tractor with attachments, a D8 caterpillar Tractor (Bulldozer), and another tractor. She also brought from the United States a drill and plough, and a sprayrig.

The First Appellant opened a joint account with the Respondent as signatory, and for the first five years they lived and worked the ranch together. Relations which the First Appellant described as "good" at first gradually deteriorated until they parted company in 1987.

During the relationship the parties discussed entering into a formal partnership and in the presence of their Accountant, compiled a list of properties which should form part of the partnership assets, prior to approaching an Attorney-at-Law to formalise the partnership agreement, by reducing it into writing. No formal document was eventually drawn up, and books of account of all activities on the ranch continued to be kept in the name of the First Appellant only.

The First Appellant left Belize early in 1987 after what she described as a final break. On 15th September, 1987 she wrote to the Respondent offering to sell him her share of the ranch on terms. This letter was written as a result of previous telephone communication between the parties. The Respondent claims that he accepted this offer by word of mouth over the telephone.

The Respondent got married in Belize on 2 November, 1987, and next day the First Appellant telephoned from the United States to inform him that the deal was off. Nothing further happened until early February of 1988 when the First Appellant visited Belize to collect her personal belongings. Further discussions were held between the parties. By that time the First Appellant was demanding payment in full before she left Belize two or three days later, otherwise she would "go ahead and sell the place". The First Appellant eventually left Belize without receiving any payments from the Respondent.

The Second Appellant visited the ranch in March 1988, and expressed a desire to purchase it. He held discussions with the Respondent, but refused to pay the sum of U.S.$400,000 demanded by the Respondent for the ranch, on the ground that the price was too high.

On 22 April, 1988 a writ of summons was issued on behalf of the Respondent against the First Appellant in which he claimed:

"(1) A declaration that the freehold property known as the Rancho Grande comprising approx. 1200 acres with all buildings and erections thereon and together with all livestock equipment and farm chattels is held by the Defendant as trustee for the Plaintiff and the defendant or alternatively as partnership assets.

(2) An injunction to restrain the defendant, her servants or agents or otherwise from selling, leasing or otherwise disposing of or dealing with the said property or any part thereof to the detriment of the Plaintiff's interest until the hearing of this action,"

The writ of summons was handed to the First Appellant at the Bellevue Hotel in Belize City in May 1988; the exact date is not clear. However on 20 May, 1988 the First -and Second Appellants entered into an "option contract" for the sale of the Rancho Grande farm. Of the knowledge by the Second Appellant that a writ had been issued at the time that he entered into the option contract, the learned Chief Justice had this to say: "It is not clear if Leonard knew of the Writ. On balance since he was with Mary Ann in Belize seeking Attorneys' views I think that he did". Events moved swiftly thereafter. An appearance was entered on June 1, 1988. Two weeks later the Respondent was served with a notice demanding possession of the ranch; and on 9 July the Second Appellant served notice on the First Appellant exercising the option to purchase the ranch.

On July 12 and 14 the Respondent and First Appellant respectively claimed interlocutory injunctions against each other. Both matters came before Brown J who, in a decision dated 20 September 1988, made orders preserving the status quo by granting both applications. Pleadings were subsequently exchanged, and the Second Appellant's application to be joined as a party to the proceedings was granted. Eventually the matter was heard by the Chief Justice between 13 July, 1989 and 28 March, 1990. He delivered his judgment on 14 June, 1990.

In a careful and lengthy judgment, the learned Chief Justice analyzed the evidence and made the following findings. He found that the Respondent was a witness of truth and that the First Appellant had little or no respect for the truth and would say anything that suited her convenience. He found there was a partnership prior to the sale of the ranch, but that this partnership was extinguished on sale. He also found that a valid contract for the sale of her share of the ranch had been made by the First Appellant partly by way of writing and partly orally, and that there was nothing illegal either in the partnership or in the contract for the sale of the ranch. He also found that the land which the Second Appellant purported to purchase from the First Appellant had been sold to the Respondent before the Second Appellant ever came into the picture; and that any damage suffered by the Second Appellant had been caused by his impetuosity.

WAS THERE A PARTNERSHIP?

It was argued on behalf of the First Appellant that (a) the Respondent had failed to prove the existence of a partnership, since there was no proof either of an agreement, or an intention, to create a partnership; (b) the agreement to work the ranch for a share of the profits is not necessarily evidence of a partnership; (c) the refusal by the First, Appellant to follow through with the advice of the Accountant to have a formal agreement drawn up, means that no partnership was formed; (d) on consideration of the whole of the evidence, there was none on which the court below could have properly concluded that the parties intended to and agreed to form a partnership; but (e) if this court finds that a partnership exists between the parties, it is not to be confined to the ranching activities only.

The facts as found by the learned Chief Justice reveal that the parties intended to formalise their partnership arrangement. He accepted the evidence of Mr. Perez, the Accountant and that of the Respondent himself, that the parties had in fact carried on the ranching business as partners. The evidence of Mr. Perez is that the discussions which took place on 4 December,1984 at the home of the parties, were about the creation of a written partnership agreement. He advised the parties that since they were working as partners they should enter into a formal agreement. They agreed, and gave Mr. Perez a list of the assets, which he reduced to writing.

The evidence of the Respondent, which the learned Judge accepted, is that he was not a paid employee, and that he received no salary. The learned Judge found the position to be that the parties ran the ranch together, the First Appellant providing the finance to purchase more tracts of land and be a housewife, and both put labour and effort to develop and improve the ranch.

At Common law a contract of partnership need not be entered into with any particular formalities; but a person who alleges that there was a verbal agreement for a partnership, is not able to sustain an action for its breach unless he is able to prove the material terms on which the partnership was entered into. And the main rule to be observed by the court in determining the existence of a partnership, is that regard must be paid to the intention of the parties as appearing from the whole of the facts of the case Trower & Sons v Ripstein (1944) AC. 254.

The agreement must be construed as a whole and the intention may be ascertained from the words and conduct of the parties, in the absence of writing. See Adam v Newbigging 13 App. Cas. 308 at 315 per Lord Halsbury, and Weiner v Harris (1910) 1 K.B. 285 at 290 per Cozens-Hardy M.R. Additional matters which the court should take into account are the manner in which the parties have dealt with each other and the manner in which each party has, with the knowledge of the other, dealt with other people. This can be shown by books of account; the testimony of clerks, agents and other persons; by letters and admissions; and by any method by which facts can be established. Cheney v Floydd (1970) 2 W.L.R. 314. In my view there was abundant evidence on which the learned Chief Justice could have properly found that a partnership existed between the Respondent and the First Appellant.

Counsel for the First Appellant also submitted that although the receipt by a person of a share of the profits of a partnership is plima facie evidence of a partnership; the ranch never made a profit, and since the provisions of s. 4(c) (ii) were equally applicable to the Respondent as a person who was due to receive his remuneration by way of part of the profits of the business, it could not be said with any certainty that the intended receipt of a share of the profits was evidence that a partnership existed between the parties.

I am afraid that I am unable to accept this submission. The learned Chief Justice found on the evidence of the parties that the Respondent was not an employee of, but a partner in, the ranching business. He also accepted the evidence of the Accountant who kept the books of the business that in his (the Accountant's) view the parties operated the ranching business as partners, although the accounts were kept in the sole name of the Respondent. The learned Chief Justice also found that in using the words "my share" in her letter to the Respondent of 15 September, 1987, the First Appellant had admitted in writing to the existence of a partnership. It seems to me therefore that the conduct of the parties as between themselves, and also as between them and the Accountant were such as to evidence that a partnership did in fact exist between them. Consequently their relationship as partners is not affected, even if in the actual conduct of the business of the partnership no profit was actually realized.

WHAT CONSTITUTED THE PARTNERSHIP ASSETS

In his Statement of Claim the Respondent claimed that there was a mutual understanding and agreement that the Rancho Grande Farm together with an additional 94 acres adjoining plot owned by him would be developed as a joint partnership enterprise.

The First Appellant in her Defence denied that there was any partnership agreement with the Respondent; but in her counter-claim she averred that if contrary to her contention the court should find there exists a partnership with the Respondent, the partnership assets should be deemed to include not only the Rancho Grande farm but also the following additional real and personal property:

(a) the assets and proceeds of (i) a hunting operation,
and
(ii) an export business

(b) 94 acres of land adjoining the Rancho Grande farm

(c) A house in Orange Walk Town (particulars of which were to be delivered before trial).

(d) A house in Blue Creek Village in the Orange Walk District which was subsequently sold for US$25,000.00

(e) 1 Chevrolet Camaro which was subsequently sold to Anthony Paul Bautenbach

(f) 1 John Deere Tractor

(g) 1 Ford Pick-up truck

(h) 2 Land Rovers

(i) 1 - 25 foot boat purchased from Zain Hassan for US$5,000.00

(j) Partnership funds deposited by the Respondent in account No. 3442755 in a branch of Barclays Bank in Grand Cayman (US$32,966.40), and

(k) Partnership funds deposited by the Respondent in an account at a branch of Merrill Lynch in Houston, Texas (US$25,000.00).

The Accountant's evidence is that the parties gave him the following list of properties which they intended to include in a formal written agreement:

"Three lots were in the name of D1 and three in the name of the Plaintiff. Acreage for one was 100.11 acres in D1's name, second in her name was for 50.001, and a third 50.141 acres in one fiat. Another for 83.06 acres and 91.008 acres in D1's name in one fiat, hence I called them 3.

In Plaintiff's name were plots of 18.18 acres, two 59.46 acres and three 15.08 acres.

I have a note about an acreage for John Mosley of 385.736 acres - at mile 57 on the old Belize Road.

The assets to be included were a concrete building 60'x 30'. There was a lot of equipment to be included but I did not get it.

Q. Mr. Perez look again on your notes.

A. I am sorry, I was wrong, on the other page I have a note of a Residence 60'x 40'. It was separate from first structure. There was a concrete house to be included 30'x 20', two sheds 60 x 24 and 40 x 20 - no walls and the roofing.

Q. by Court:

We were sitting around a table and when this information was given I wrote it down. The description was given by them from memory but for the land they got the Folio number and fiat number.

X:

Q. Do you have a note of Golden Stream Building?

A. Yes, it was 90 x 30 concrete building with metal roof going towards Tower Hill.

There was a John Deere tractor and Dodge and GMC Pick-up but these last two were scrapped;

1972 Landrover and 1974 Ford Pick-up truck,

1981 Ford Mustang and 1982 Camaro.

I understood the cattle would be included as well as farm equipment."

The test of what comprises partnership property is to be determined by the agreement of the partners among themselves. However, if there is no express agreement attention must be paid to (a) the source when the property was obtained, (b) the purpose for which it was acquired, and (c) the mode in which it has been dealt with.

Whatever has been thrown into the common stock, and whatever has from time to time during the continuance of the partnership been added thereto, or obtained by means thereof, whether directly by purchase or circuitously by employment in the business also belongs to the partnership unless the contrary is shown.

Further, property which has been used and treated as partnership property is presumed to be partnership property (Gian Singh V Devrah Naharet al (1965) 1 W.L.R. 412), but this is a rebuttable presumption. (See Eardley et al v Broad et al (The Times, 28 April, 1970), where it was held that a lease of a farm upon which a farming business was carried on did not, on the evidence before the court, become partnership property.)

In my view the assets contained in the list which was supplied to the Accountant by the parties cannot all be held to have constituted the partnership assets because they were not all used as such. Applying the test stated above, since there was no express agreement, one must look to other matters to determine what those assets were. That portion of the Rancho Grande lands which was operated as a ranch, must be thrown into the common stock as part of the First Appellant's share, since it was used and treated as partnership property; so also must the equipment and vehicles which were either required to run the farm or were purchased with partnership funds. The First Appellant also claims to have invested in excess of US$300,000.00 between 1971 and 1987 in the farm and its operations. The Respondent pleaded that his 94 acre plot adjoining the farm was also to be developed as part of that farm. This portion of land, it seems to me, must also be treated as partnership property. From his end also come whatever sums of money which the Respondent would have contributed from his hunting business, which together with his labour would have constituted a further contribution. No other properties which belonged to the parties could reasonably be regarded as partnership property, unless they were purchased with partnership funds.

The extent of each party's shareholding in the partnership has not been easy to determine. The learned Chief Justice found that the parties ran the ranch together, the First Appellant "providing the finance to purchase more tracts, of land and be a housewife, and both put labour and effort to develop and improve the ranch". I interpret this statement to mean that the First Appellant was not contributing all her land to the partnership at the outset; but was prepared to release gradually any tracts of land in her possession, or if it became necessary, to purchase additional land, for the development and improvement of the ranch.

Mr. Perez, the Accountant gave evidence to the effect that he formed the impression that the shareholding by the parties in the partnership was to be on a 50 - 50 basis. The First Appellant claimed that despite... the discussions with the Accountant on the preparation of a formal partnership agreement she had no intention of forming a partnership agreement with the Respondent because he had been unfaithful and abusive to her, and that in any case he had few assets to warrant a 50 - 50 partnership. Further she was contributing the majority of the assets and there was no agreement on a partnership in any other proportion. On this question the learned Chief Justice found that there was in fact a tacit partnership agreement between them, but that the First Appellant was not prepared to commit herself to paper.

A determination of the proportion in which the parties held shares in the ranching business has not been made easier by the lack of evidence of the acreage which formed the ranching business at the time the close relationship which previously existed between the parties, came to an end; but I am not convinced on the evidence that it included the whole of the First Appellant's land. While I would hold therefore that the parties intended to conduct the partnership business on a 50 - 50 basis, I would nonetheless find that in respect of the First Appellant's lands, only such parcel or parcels as were actually referred to in the Appellant's letter of September 15, 1987 to the Respondent could be considered as forming part of the partnership assets. This would exclude other lands, including that parcel over which she held the power of attorney.

WAS THE PARTNERSHIP ILLEGAL

The third ground of appeal is to the effect that the learned trial judge erred in law in holding that the partnership which existed between the First Appellant and the Respondent was not illegal. In her Counterclaim the First Appellant pleaded that between 1977 and 1987 the Respondent and herself carried on a hunting operation and also an export business as partners, and she claimed a Declaration that the Respondent holds the assets and proceeds from these operations either for the partners or on trust; and prayed that the affairs of that partnership be wound up and all necessary accounts and enquiries be taken.

The Respondent denied the existence of such a partnership. He claimed that he carried on a hunting operation on his own and invested the proceeds in the Rancho Grande farm operations. The learned Chief Justice dismissed the First Appellant's claim summarily. He stated: "I do believe her that she played a social role in the hunt and probably enjoyed it, but I reject entirely that she was a business partner in this venture. "

A partnership is illegal if formed for the purpose of deriving profit from a criminal offence e.g. smuggling. In order to show that a partnership is illegal, it is necessary to establish either that the partnership is one the attainment of which is contrary to law; or that the object being legal, its attainment is sought in a manner which the law forbids. Illegality is never presumed, but must always be proved by those who allege its existence; but if the illegality is either apparent on the face of the proceedings, or appears in the course of the trial, the court will itself take cognizance of the illegality and act accordingly, even though the illegality is not relied on by either party. Scott v Brown, Doering McNab & Co, (1891-4) All E.R. Rep. 654.

The pleadings revealed no evidence of illegality. But at the hearing the First Appellant gave evidence of the business of exporting Marijuana in which she and the Respondent had been engaged at the same time as they were conducting the farming operations. The Respondent denied this; and it is obvious that the learned Chief Justice did not believe the First Appellant, as he made no mention of this in his judgment. The First Appellant also gave evidence to the effect that the hunting operation was carried on contrary to the provisions of the laws of Belize.

As has already been stated the learned Chief Justice found that the First Appellant was not a partner in the hunting business and no evidence has been led to show that the ranching business, which was the only business which was specifically found to have been the subject matter of a partnership between the parties, was the subject of any illegality.

The learned Chief Justice in a fair amount of detail examined the circumstances in which a court would not enforce a contract on the ground of illegality. The same legal requirements would naturally obtain in a contract of partnership. He did not find any grounds on which he could hold that the ranching business was either illegal or tainted with illegality. I have also examined the evidence, and agree with the findings of the learned Chief Justice that the ranching partnership was not tainted with illegality.

CONTRACT FOR SALE

On 15 September, 1987 some months after the parties had ceased living together the First Appellant wrote the Respondent the following letter:

" September 15

Bader,

Received the cheque, opened an account for Nazira in the Bank in Canyon. She is doing so well adjusting to College and making friends and seems to be enjoying it all. Her classes are going well and she is working hard to make good grades and get a scholarship for next semester. I talk to her a couple of times a week.

The payment schedule for her tuition, room and board are as follows:

I have come up with what I hope is a reasonable figure for my share of the ranch, $150,000.00. It is the amount which I paid for the land. I would like to have my personal effects from the house also.

The $150,000.00 could be paid as follows. Down payment - yearly payments balance in 5 years and 10% interest on the balance after the down payment.

Guess you will let me know so we can go from there.

Best of luck to you
My love to the girls
Mary Ann. "

The third paragraph of this letter seems quite clear. The First Appellant was offering to sell her share of the ranch to the Respondent at the same price which she had paid for the land. The sale was not to include her personal effects which were still in the house. She indicated that there was to be a down payment, yearly payments of the balance over 5 years, and the rate of interest which she expected to be paid. There is no indication in the letter of the size of either the down payment or of any of the instalments.

The learned Chief Justice found that the terms contained in the letter constituted an offer to enter into an open contract which could be accepted within a reasonable time, that the Respondent had accepted the offer by telephone, and that payment was to be in U.S. dollars. He agreed with learned counsel for the Respondent that the amount of the down payment and the instalments were vague, but he thought it was clear from the letter and the relationship of the parties before the Respondent's marriage that this was a minor element which would not vitiate the agreement. The learned Chief Justice reduced the issue to a simple one of credibility, and ordered specific performance of the contract in the following terms:

"I shall try to put myself in the position of the parties prior to Mary Ann's repudiation of the contract on 3rd November 1987 and make an assessment taking account the amity as expressed in Mary Ann's letter, and had the marriage of Badder not occurred, what down payment would likely to have been agreed and the quantum of the instalments. I will assume that the parties would have been fair to each other and on this basis I come to the conclusion that their agreed price would be divided into 6 equal parts of US$25,000.00 each. The schedule of payments upon which most likely they would have agreed, would be:

Initial Down Payment: US$25,000.00 which I order that it be payable on 1.9.1990

Interest of 10% on the balance after down payment

(US$125,000 x 10%) = US$137,500

$137,500 - 5 years = US$27,500

Payments will be made in the currency of Belize and the onus will be on Mary Ann to seek Exchange Control Approval. Mary Ann will pay the costs of the action as agreed or taxed, deductible from the first instalment on 1.9.199l."

Counsel for the First Appellant submitted that there was never a binding contract between the parties, as the terms on which the offer was made were neither certain nor capable of being rendered certain (Halsbury's Laws of England 4th Ed. Vol. 9 paragraph 227). This was so, Counsel continued because there were several elements which were missing from the offer for which no machinery was provided for resolution. These were:

(a) the amount of the deposit;

(b) the date on which the deposit was to be paid;

(c) was the deposit forfeitable or was it to be returned if no instalment was paid;

(d) the amount to be paid annually;

(e) at what times the annual payments were to be made;

(f) to which jurisdiction the payments should be sent;

(g) what would happen in a case of default to pay an instalment;

(h) when was the title to the property to pass; and

(i) was a proportionate part of the First Appellant's share to be transferred to the Respondent after each instalment had been paid-

Counsel stressed that there was no machinery provided by the parties to fill those glaring omissions; and that in finding that a contract had been entered into by the parties with terms which could be implied by the court, the learned Chief Justice had in fact "made" a contract for the parties.

It should be constantly borne in mind that although the land formed part of the partnership assets, what the First Appellant was offering for sale was not land per se but her share of all the partnership assets. The question, therefore, as to whether the terms of the sale of the First Appellant's share corresponded to the legal requirements for a sale of land simpliciter does not arise.

The cases Clifton v Palumbo (1944) 2 All E.R. 497, Hillas v Arcos (1932) All E.R. Rep. 494, Courtenay v Tolaini (1.975) 1 All E.R. 716, Gibson v Manchester City Council (1979) 1 All E.R. 972, and Bushwall Properties v Vortex Properties (1976) 2 All E.R. 283 were among the authorities cited by Counsel in support of his submissions. I hope I do no violence to his submissions if I do not deal with all the authorities cited by him on this point, but this does not seem necessary in view of the decision which I have arrived at, on this ground of appeal.

The learned Chief Justice seems to have lost sight somewhat of the issues. Having found that a partnership existed, the only possible interpretation which could be placed on the First Appellant's letter is that she was offering to dispose of her share of the partnership assets. Yet he speaks in terms of the sale of the First Appellant's land, and at other places of the sale of her ranch; and even suggests that the partnership was dissolved on the formation of the contract. This finding is contrary to the provisions of section 34 of the Partnership Act, Chapter 211. In my view the First Appellant was offering to sell personal property and not real property. (Section 24 of the Partnership Act, Chapter 24). Although she still held the legal estate in the land, it was held on trust for the partnership; which relationship would have subsisted until the First Appellant had been fully compensated for her share.

The proper question for the determination of this court is whether in fact and in law a contract had been concluded between the parties; and I approach this matter bearing in mind that while it is not the business of courts of law to make or perfect contracts for parties, the general principle to be applied is that where the parties have omitted to make provisions for, or have left undecided in their agreement, matters which are not fundamental to the agreement, the court may and should imply the necessary terms to give the contract business efficacy. The question therefore is, were those terms which the learned Chief Justice implied into the contract of such fundamental importance that they could not unequivocally be said to represent the intention of the parties?

The learned Chief Justice put himself in the position of the parties prior to the First Appellant's withdrawal of the offer, and made an assessment taking into account the amity as expressed in her letter, and the situation which may have existed between the parties had the marriage of the Respondent not occurred. A very formidable task indeed. Added to this, he assumed that the parties would have been fair to each other. He apparently did not assume that the Respondent, having brought the relationship with the First Appellant to an end would wish to exact terms of payment which would be as favourable as she could possibly obtain. He also concluded that the deposit and instalments were to be paid in equal instalments and in the currency of Belize.

It is a well-established rule that the parties must make their own contract, and this means that they must agree on its terms. If therefore the terms are unsettled or indefinite, the contract cannot be upheld. For although the courts always seek to implement the intention of the parties, they will not make a contract for them in order to do so. On the other hand it must be emphasized that the Courts seek to uphold bargains whenever possible; and the principles which govern their approach were succintly stated by Lord Wright in Hillas & Co. Ltd. v Arcos Ltd. (1932) 147 L.T. 503 at 514 in the following words:

"Business men often record the most important agreements in crude and summary fashion; modes of expression sufficient and clear to them in the course of their business may appear to those unfamiliar with the business far from complete or precise. It is accordingly the duty of the court to construe such documents fairly and broadly, without being too astute or subtle in finding defects; but, on the contrary, the court should seek to apply the old maxim of English law, verba ita sunt intelligenda ut res magis valeat quam pereat. That maxim, however, does not mean that the court is to make a contract for the parties, or to go outside the words they have used, except in so far as there are appropriate implications of law."

Bearing these words in mind, unlike the learned Chief Justice, I am unable to conclude on the evidence with any sense of conviction that this is the manner in which the parties would have conducted their business. And even if it could conceivably be thought that the parties may have arrived at the same conclusion; the other factors mentioned by Counsel for the First Appellant viz: when was title to pass, what was to happen in the case of default of the payment of an instalment, and was a proportionate part of her share to be transferred with each instalment paid; are very important matters which were not addressed, and for the determination of which no provision was made.

In my view these matters are of too fundamental a nature to have been left undecided, and despite the valiant effort by the learned Chief Justice, I would hold that the offer contained in the First Appellant's letter of 15 September, 1987 was too uncertain and was not capable of acceptance as to create a binding and enforceable contract between the parties. As a necessary consequence I would also hold that the learned Chief Justice erred in granting the order for specific performance.

MR. ANTHONY P. LEONARD'S CLAIM

Mr. Leonard is a rancher in the United States of America. He visited Belize in March, 1988 to look at farms with a view to purchase. On his second visit in April, 1988 he was told that Rancho Grande farm was for sale. He visited the farm and discussed the matter with the Respondent. Negotiations broke down on the price, and he failed to effect the purchase from the Respondent. Mr. Leonard obtained the First Appellant's address in the United'States from two employees of the farm and he proceeded to the United States to see her.

In May 1988 Mr. Leonard paid his third visit to Belize. On this occasion he was accompanied by the First Appellant. During this visit the writ was served on the First Appellant. The learned Chief Justice found that when they arrived in Belize they brought with them an unsigned "option contract" for the sale to Mr. Leonard of the Rancho Grande farm; and that this document was executed in Belize on 20 May, 1988. The Chief Justice also found that "On balance since (Mr. Leonard) was with Mary Ann (the First Appellant) in Belize seeking attorneys' views I think he did (know of the writ). "

What is not clear in this finding is whether Mr. Leonard knew of the writ before he signed the "option contract". There seems to be no doubt in the mind of the learned Chief Justice, however, that when Mr. Leonard, on 9 July, 1988, exercised the option which had been granted to him he knew that a writ had been issued. As to whether Mr. Leonard also knew the true relationship which existed between the Respondent and the First Appellant when he paid his second visit to the farm in April, 1988, there was disputed evidence before the learned Chief Justice who found that Mr. Leonard was not a candid witness in respect of most of the events which took place on that occasion. He believed that the Respondent told Mr. Leonard that he was a partner in the activities of the ranch.

On 14 February, 1989 Mr. Leonard applied to be joined as a second defendant to the action in which he claimed-

(a) A declaration that he is entitled to have the legal estate of Rancho Grande vested in him in accordance with the agreement between himself and the First Appellant.

(b) Damages for interference in the option contract made between himself and the First Appellant, and

(c) Costs.

The learned Chief Justice refused those claims, and Mr. Leonard appears in this court as the Second Appellant.

The burden of learned Counsel's submissions on behalf of the Second Appellant were that -

(a) if there never was a contract between the Respondent and the First Appellant, the Second Appellant is in the clear as to his contract with the First Appellant. (Halsbury Laws of England, 4th Ed. Volume 42, para, 185, page 138; the General Registry Act, Chapter 258, sections 70 and 71; the Law of Property Act, Chapter 154, sections 103 to 106, especially section 105 which states the effect of nonregistration)

(b) the agreement between the First Appellant and the Respondent was not registered on 20 May, 1988 when the option to purchase was given, or on 9 July, 1988 when the option was exercised, or even at the date of the hearing; so that even if there was a valid agreement comprised by the letter and subsequent telephone call, the initial element of registration was missing. Consequently, any agreements which had been entered into were personal ones. They did not affect the Rancho Grande lands which were on that date free from any encumbrances even if a writ had been issued. (Midland Bank Trust Co. v Green (1981) 1 All E.R. 153, Hulse v Thompson and Kobitz, Civil Appeal No. 6 of 1980 (Belize)

(c) under the laws of Belize, the Second Appellant was entitled to enter into an agreement with the First Appellant, to transfer title to him by way of exchange or sale, and that any rights and remedies which might spring out of any agreement which the Respondent had made with the First Appellant were limited to the proceeds of sale or the consideration of sale.

(d) the Second Appellant was therefore entitled to the declaration, as prayed and damages should also be awarded to the Second Appellant.

In Hulse v Thompson and Kobitz one of the questions raised before the Court of Appeal was whether the court could rely on the provisions of an unregistered deed which should have been held to be invalid under the provisions of section 71 of the General Registry Act, Chapter 218. It was held that the deed was binding on the parties to it, even though it was not registered. P. T. Georges, J.A. used persuasive authority from the United States of America to support the view that while non-registration of a deed may affect the rights of the party who fails to register as against third Parties; as between the parties to that deed it is a valid document to pass title, Both authorities quoted by P. T. Georges, J.A. makes this point clear.

In Thompson on Real Property, 1963 Replacement Volume 8, paragraph 4292 the author states in part:

"The recording acts are not intended for the benefit of the parties to a recordable contract as between each other and as between them the instrument is generally considered binding even though it is not recorded. Generally it is held that An unrecorded deed is held valid not only as to the parties but to all others who had notice."

A similar sentiment was expressed by the United States Supreme Court in the second authority deLane et al v Moore et al (1882) 14 How. 251:

"The sole purpose of recording the deed is that those who might deal with the parties thereto, or with the subjects it comprised, should have knowledge of the true condition of both, and if such knowledge is presumed, or may be established by legal inference from the fact that the deed has been recorded, a fortiori, it must be established by actual notice."

Section 71 of the General Registry Act provides that no deed is to have any effect unless it is lodged for record in the office of the Registrar within one month after the date of its execution where it is executed within Belize, and there is a proviso which grants power to the Chief Justice to extend the time. This provision is similar to those from Maryland and South Carolina quoted in Hulse's case; and consequently the doctrine of notice continues to govern the binding effect of the rights of the parties in this case.

The case of Midland Bank Trust Co. v Green was, however, decided against a different background. The Land Charges Act, 1972 (U.K.) (replacing a similar Act passed in 1925), provides a fundamentally different scheme of registration. This scheme which is very simple in concept proceeds on the basis of two general and strict rules. First any interest or matter once registered is deemed to affect all persons with notice, and therefore becomes binding for all practical purposes upon the entire world. Secondly, a registrable interest or matter, if not duly registered, is normally rendered void or ineffective in relation to third parties even if they had notice.

Although the Law of Property Act of Belize is very largely based on the U.K. Law of Property Act, 1925; and indeed section 153 of the Belize Act extends the whole of the U.K. Settled Land Act, 1925 to Belize, no language identical to the strict registration provisions contained in the Land Charges Act of the U.K. is to be found in the laws of Belize and consequently the same rigid interpretation should not be placed on the Belize provisions.

When the Second Appellant visited the Rancho Grande farm for the second time, he negotiated unsuccessfully with the Respondent for the purchase of the ranch. The learned chief Justice found that the Respondent did tell him of the relationship with the First Appellant. The Respondent was, as the Second Appellant well knew, in possession of the ranch; and as intending purchaser the onus was on him to make those necessary enquiries of the person in possession in order to discover what his rights were. It may well be, as the learned Chief Justice found, that the Second Appellant was not told the truth by the First Appellant when he made enquiries of her as to the status of the Respondent. This is not surprising. What is revealing, however, is that the Second Appellant takes an option to purchase the farm from the First Appellant after a Writ of Summons is served on her by the Respondent. The learned Chief Justice found that he believed on balance that the Second Appellant knew of the existence of the Writ at the time he took the option.

The Respondent by virtue of the partnership agreement had an equitable interest in the land which was registered in the sole name of the First Appellant. This he was entitled to protect. He did not do so by registration; but he was in possession of the property. If the Second Appellant had been able to establish himself before the learned Chief Justice as a bona fide purchaser for value without notice of the Respondent's rights, then he would have been entitled to the declaration as prayed.

In Midland Bank Trust Co. v Green, Lord Wilberforce, in delivering the opinion of the House of Lords had this to say about the bona fide purchaser for value:

"My Lords, the character in the law known as the bona fide (good faith) purchaser for value without notice was the creation of equity. In order to effect a purchaser for value of a legal estate with some equity or equitable interest equity fastened on his conscience and the composite expression was used to epitomise the circumstances in which equity would, or rather would not, do so. I think that it would generally be true to say that the words 'in good faith' related to the existence of notice. Equity, in other words, required not only absence of notice, but genuine and honest absence of notice. As the law developed, this requirement became crystalloid in the doctrine of constructive notice which assumed a statutory form in the Conveyancing Act 1882, s. 3. But, and so far I would be willing to accompany the Respondents, it would be a mistake to suppose that the requirement of good faith extended only to the matter of notice, or that when notice came to be regulated by statute the requirement of good faith became obsolete. Equity still retained its interest in, and power over, the purchase's conscience. The classic judgment of James L. J. in Pitcher v Rawlins (1872) LR 7 CH App. 259 at 269 is clear authority that it did: good faith there is stated as a separate test which may have to be passed even though absence of notice is proved. And there are references in cases subsequent to 1882 which confirm the proposition that honesty or bona fides remained something which might be inquired into (see Berwick & Co. v Price (1905) 1 Ch. 632 at 639, Taylor v London and County Banking Co. (1901) 2 Ch. 231 at 256 and Oliver v Hinton (1899) 2 Ch. 264 at 273)."

I respectfully adopt those words and would apply them to the present case. In my view the Respondent has failed to discharge the burden placed upon him to prove that he was a bona fide purchaser for value without notice. Indeed he relied heavily on the absence of registration, but as I have sought to show, this does not avail him in the absence in Belize of legislation identical to that contained in the U.K. Land Charges Acts. Although in theory the First Appellant had the capacity to sell, I would hold that the Second Appellant is not entitled to the declaration as prayed since, at the time he entered into the various transactions, he knew of the Respondent's interest. Consequently, the claim for damages is also refused.

The Order of the Court is as follows:

(1) The first, fourth and seventh grounds of appeal are allowed.

(2) The Second, third, fifth and sixth grounds of appeal are dismissed.

(3) We order the dissolution of the assets of the partnership of the ranching business which we hold comprised

(a) the portion of land purchased by the First Appellant for the sum of US$150,000.

(b) the parcel of land comprising 94 acres belonging to the Respondent.

(c) all equipment and vehicles which are required to run the ranch, or were purchased with partnership funds, and

(d) all other property both real and personal which were acquired were partnership assets.

(4) We refer the matter to a Judge of the Supreme Court to make the necessary consequential orders and appointments leading to the dissolution of the partnership and the distribution of the net proceeds in equal shares between the First Appellant and the Respondent; or in such other proportion as may be agreed between them.

(5) We order that the Respondent should pay the costs of the First Appellant both here and in the Court below to be taxed or agreed; and that the Second Appellant should pay 50% of the Respondent's costs both here and in the Court below, to be taxed or agreed.

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