Supreme Court
Action No. 140 of 1999
7th April, 2000
Shanks, J.

Mr. Dean Barrow, S. C. for the Plaintiff
Mr. Fred Lumor for the Defendant

Lease Agreement - Defendant ejecting Plaintiff from
premises contrary to Lease Agreement - Assessment of
damages.

J U D G M E N T

1. This is a claim for damages arising out of the premature termination of a lease dated 18 August, 1998. Under the lease the Plaintiff company was given the right to use an area of 2,189 square feet of the Philip Goldson International Airport Building Arrivals hall to sell "duty free" goods. The lease was to run until 12 August 2003 and there was an option for the Plaintiff to extend it for another ten years. The rent was $6,250 a month or 15% of the Plaintiff's gross receipts, whichever was greater. Although the lease was dated 18 August, 1998 it was clear there had been discussions about it for over a year before and the Plaintiff's predecessor company (Lauren International Duty Free) had been operating duty free stores at the airport for many years. The lease was entered into at the time that a new extended Arrivals hall and duty free store had been constructed which was officially opened on 25 August, 1998.

2. I am told that after the August 1998 election the entire Board of the Belize Airports Authority was changed. On 23 November, 1998 the BAA wrote a letter to the Plaintiff which stated that the Board "have noted the construction of a large duty free concession in the arrival hall …. It continued "The Board wishes to inform you that it did not authorize, approve, or grant lease of any arrival concession … to UETA … The Board has directed that the structure erected in the Arrival Hall should be removed to another location … before 11 December, 1998. If it is the intention of the company to lease concessions in the Arrival Hall of the Airport you are required to approach the Authority in order to do so within the period stated above. The Authority reminds you that it is an offence to carry on any trade or business at the Airport without the approval of the Belize Airports Authority". Mrs. Sylvestre, the vice president of Plaintiff company, told me (and I accept) that she had had dealings with the new Board in the period up to 23 November, 1998 and that rent had been paid and accepted by the BAA in accordance with the lease of 18 August, 1998. It will be apparent therefore that the BAA's letter was rather disingenuous.

3. There were negotiation between the parties which came to nothing so the Plaintiff started this Action on 31 March, 1999. An application was made for an interlocutory injunction to stop the BAA seeking to resile from the terms of the lease. That application failed and on the same day (30 April, 1999) the BAA simply removed all the Plaintiff's fixtures and fittings and inventory of goods and put them in two 40 foot containers without any kind of warning, damaging them severely in the process. Notwithstanding that the application for an injunction had failed this was, in my view, oppressive and unacceptable behaviour on the part of those responsible for running a public authority.

4. Although the Defendant saw fit to plead fraud against Mrs. Sylvestre, Mr. Godoy (the former chairman of the BAA) and Mrs. Tillett (a former director and acting secretary) (an allegation for which I could see not a scrap of evidence) and a number of other defences, the only defence persisted in at the end of the trial was that the lease was void or of no effect because Mr. Godoy and Mrs. Tillett who participated in the execution of the lease had no authority to do so, there being no decision of the Board to enter into the lease or delegate to them power to do so. It was clear that Mr. Lumor recognized that this was a highly technical and unmeritorious point but, of course, if it is valid in law, I must give effect to it.

5. The BAA is established under the Belize Airports Authority Act. The relevant provisions are as follows:

"3 …..

13 …

17 …

6. It will be apparent that the BAA has ample power to enter into an agreement like the one in question. Mr. Lumor's defence is not therefore one of ultra vires in the strict sense but relates solely to the authority of Mr. Godoy and the internal management of the BAA. The lease bears the common seal of the BAA and states: "The common seal of the above BELIZE AIRPORTS AUTHORITY pursuant to a resolution of the Board of Directors was duly affixed hereto by the Chairman and the same was delivered in the presence of …" and then it bears the signatures of Mr. Godoy and Mrs. Tillett. Since the lease is perfectly valid on its face Mr. Dean Barrow was right in my view to submit that the onus lay on the Defendants to establish this defence.

7. The only relevant evidence called by Mr. Lumor established only that there was no minuted decision or resolution of the Board of BAA approving the lease or its terms. Mrs. Sylvestre gave evidence that she had meetings with a number of Board members sometimes together around the Boardroom table during the course of the negotiations and that Mr. Godoy told her before completion that his Board had approved the signing of the lease. Mr. Godoy gave evidence, which I accept notwithstanding the lack of minutes, that the Board (which numbered seven) knew about and approved his signing of the lease. He pointed out, correctly, that this could readily be checked with the other members of the Board. In the light of this evidence, it will be apparent that BAA's defence must fail as a matter of fact: Mr. Godoy and Mrs. Tillett were in fact fully authorized by the Board to enter into the lease on behalf of the BAA.

8. But, even if they were not so authorized, I am quite satisfied that the defence would fail for at least two reasons. First, although the point was not canvassed at trial, it seems to me that by accepting rent calculated in accordance with the lease the BAA were taking "… the benefit of a contract made in an irregular manner, though not ultra vires .." which amounts to an adoption of the contract and ratification therefore. (see Chitty Vol. 1 28 Ed. para. 9-040). Second, the BAA is, in my view, estopped in any event from denying that Mr. Godoy had authority and Mrs. Sylvestre was entitled to assume that matter of internal management had been properly carried out. It seems to me that she would clearly satisfy the four requirements (adapted as necessary to the circumstances) of such an estoppel set out by Diplock LJ in Freeman v Buchurst [1964] 2 QB 480 quoted at Chitty Vol 1 para. 9-045: Mr. Godoy's position as Chairman of BAA clearly amounted to a representation that he had authority to enter a contract like this on its behalf; the representation was made by the Minister's appointment, the Minister having actual authority to make it, Mrs. Sylvestre must have been induced by his position as Chairman to enter into the contract and the Board have power to delegate to him the authority to enter into the contract.

9. The BAA's defence therefore fails and the lease of 18 August, 1998 was valid and binding. It has clearly been repudiated by the BAA and the Plaintiff is entitled to damages for the repudiation. Mrs. Sylvestre gave evidence that the net profit expected over the balance of the lease based on actual sales for the period for September 1998 to March 1999 and allowing for a 10% increase in sales per year to reflect likely growth in tourist numbers was $487,000; extrapolating from that figure but not allowing for any further increases in sales would give an additional $1,138,000 over the following ten years assuming the Plaintiff exercised its option under clause 31. The total lost profit on this basis would be $1,625.000. Mr. Lumor did not challenge the figures as such but he pointed out through cross-examination that they were speculative and subject to various contingencies like increased crime in Belize, tropical storms, the need for the Plaintiff to keep fulfilling all the terms of the lease and the possibility of competition in the Arrivals Lounge (unlikely I would have thought but not prohibited in my judgment by any term in the lease). The figure for lost profit also needs to be discounted heavily of course to reflect the fact that a 15 year stream of income will be received in one lump sum. Taking account of Mr. Lumor's contingencies and the need to discount I think a fair figure to reflect the Plaintiff's loss of profit would be $850,000.

10. Mrs. Sylvestre also gave uncontradicted evidence that $195,391 worth of stock was either lost or damaged by the BAA in the process of ejecting the Plaintiff from the airport. I can see no answer to the claim for this sum. Further, Mrs. Sylvestre gave evidence that an advance rental payment of $80,000 had not been credited and this should be returned to the Plaintiff. Against this should be set off a figure quoted by Mr. Lumor of $167,000 representing the rent payable for the period 30 January to 30 April 1999. This gives a total of $108,391 on which one's years interest of 12% should be given, totaling $121,397.

11. There shall be judgment for the Plaintiff for $850,000 + $121,397 = $971,397.