Supreme Court
Action No. 381 of 1994
18th February, 2000
SHANKS, J.

Mr. E. Andrew Marshalleck for the Plaintiff.
Mr. Fred Lumor for the Defendant.

Sale of land - Delay in completing sale - Delay attributable to both Vendor and Purchaser - Whether appropriate to award damages.

J U D G M E N T

1. This is a claim for damages for delay in completing on a contract for the sale of land at Placencia. The contract was dated 25 June, 1993. Under it, the Defendant agreed to sell the plaintiff a lot "comprising 26.961 acres... being the parcel of land granted by Governor's Fiat Grant No.8 of 1908... which is more particularly drawn and described on a Plan of Survey by John Hertular [produced in 1992]". Unfortunately, as later emerged, the parcel of land granted by the Governor's Fiat (which was the root of title) was only about 20 acres and did not include an additional six or seven acres of mangrove swamp to its West which was shown on Mr. Hertular's plan. This land was in fact owned by the Government. The purchase price in the contract was $680,000 (of which $68,000 was paid on execution of the agreement as a deposit) and completion was to take place at most 60 days after the agreement. The contract also contained this important provision at clause 9:

   "The Property is believed and shall be taken to be correctly described and no error omission or misdescription of the property shall invalidate this contract but the same shall if it materially effects the description of the property be the subject of compensation to be paid or received by the Vendor... to be assessed in case the parties differ by a single arbitrator …"

Clause 10 provided that " . . . completion of the purchase by delivery of the deed and payment of the balance of the purchase money ["purchase money" was defined as BZE $680,000] shall be on or before [24 August, 1993]... time being of the essence thereof."

2. On 24 August, 1993 Mrs. Rochon attended at Barrow & Co.'s offices to complete. Mr. Denys Barrow, who is a director of and shareholder in the Plaintiff company, and was also acting as its attorney, indicated that the Plaintiff would not be able to complete on that day because it had not completed its financing arrangements with Scotiabank. Mr. Barrow's evidence was that Mrs. Rochon then agreed on an extension of the date for completion to 30 September. However, he was unable to recall precisely by whom and when this was agreed and there was nothing in writing about it. Mrs. Rochon and her agent Mr. Flowers were both adamant they had not agreed an extension and I find that although Mrs. Rochon clearly waived any right to terminate the contract for failure to complete by the company, there was no agreement on a new completion date. I do not think very much turns on this.

3. At the beginning of September approval for a loan was given by the Bank to the Company. However, at about the same time the Bank's lawyers discovered the problem with the Hertular's survey plan which I have already mentioned. On 8 September, 1993 Mr. Barrow wrote to Mrs. Rochon's attorneys stating that the Plaintiffs were ready to complete but also stating that in consequence of the misdescription of the parcel of land " ….we require the Vendor to allow us by way of compensation such reduction from the purchase price as may be agreed or determined by an arbitrator …" The letter continued:

   "After the amount of the said deduction shall have been determined as aforesaid, we shall tender a conveyance in the usual form for execution and shall then be ready to pay the balance of the purchase money less such deduction. As a first step to agreeing upon the amount of deduction, please let us have your client's suggestion as to amount."

4. Mrs. Rochon did not reply to that letter but she did apply to the Ministry of Natural Resources to purchase the six acres. Her application came to the notice of the Plaintiffs who opposed it on the ground that it was irregular for a foreigner to be allowed to purchase land for the purpose of selling it on to a Belizean. The Ministry turned down Mrs. Rochon's application on 20 September, 1993. An application to purchase the six acres was made by the Plaintiffs and granted on 14 October, 1993 and the price ($6,961, or $1,000 per acre) was paid on 10 November, 1993. Meanwhile, Mr. Barrow wrote to Mrs. Rochon's lawyer on 30 September, 1993 proposing a reduction in purchase price of $176,296 and stating that if the Plaintiff had not heard back by 4 October 1993 they would proceed to arbitration. A formal arbitration notice was issued on 5 October 1993. On about 19 October, 1993 the Plaintiffs took out an originating summons to appoint an arbitrator. Mrs. Rochon's Belizean agent, Mr. Flowers, would not accept service of that summons and an order for substituted service had to be obtained. Around this time Mr. Barrow had a conversation with Mr. Derek Courtenay (who was now acting for Mrs. Rochon) in which he proposed that completion go ahead with payment in full by the Plaintiff company but with part of the purchase price being held in escrow pending the outcome of events. This extremely sensible proposal apparently found no favour with Mrs. Rochon who steadfastly maintained that she did have title to 26 acres and not just 20 acres, in spite of the fact that she had already tried to purchase the additional six acres.

5. There was then a slight change of tack by the Plaintiff. Mr. Barrow told me that he realised that the Defendant was refusing to concede even that there had been a misdescription or that she was not able to convey 26 acres of land. He therefore formed the view that it was necessary to resolve this issue and a vendor and purchaser summons was taken out in early December 1993 for a declaration that Mrs. Rochon had not shown good title. Although she had applied unsuccessfully to purchase the six acres from the Government, Mrs. Rochon acting no doubt on advice continued to refuse to accept that she had title only to 20 acres and opposed the originating summons. A great deal of evidence was filed (including evidence from two experienced surveyors on Mrs. Rochon's side) and the matter was heard by Sir George Brown in March 1994. He gave judgment on 8 June, 1994 declaring that Mrs. Rochon was only entitled to convey 20.328 acres and stating that clause 9 of the contract should be adhered to and ordering her to pay the costs of the summons.

6. Mrs. Rochon's lawyers made an offer in a letter of 22 June, 1994 to pay compensation under the clause at $5,000 per acre and that offer was in due course accepted. On 19 October, 1994 the Plaintiff produced a form of conveyance relating to the 20.328 acres and showing the price as $680,000 less the agreed compensation ($33,165) for execution by Mrs. Rochon and completion finally took place on 22 November, 1994. Meanwhile, the Plaintiff had started this action for damages for delay on the part of the Defendant. In their letter before action dated 4 October, 1994 the Plaintiffs had claimed damages for delay of $119,680. Their amended statement of claim seeks damages of $469,480.

7. Clearly, under the terms of the contract, including clause 9, Mrs. Rochon was obliged to convey to the Plaintiff company the 20 acres to which she did have title and, although she had been called upon to do this by Mr. Barrow's letter of 8 September, 1993, she did not do so until 22 November, 1994. However, having considered the matter at great length in the light of the extremely able and comprehensive submissions of counsel, I have reached the view that on a proper construction of the contract, and particularly clauses 9 and 10, the company is not entitled to claim damages from her for delay in completion.

8. Clause 9 is a common type of provision which is designed to protect the position of a vendor by expressly regulating the purchaser's rights in the event of a misdescription (as, it is common ground, occurred here) (see Barnsley's Conveyancing Law & Practice, 3rd Ed, p. 563). There are many cases on such clauses but they are all essentially decisions on the construction of the particular wording before the court (ibid. p. 565). It is
   necessary to construe the clause to see what rights it gives a purchaser in the event of a misdescription and what effect this has on the obligations of the parties in relation to completion. It seems to me that the clause properly construed enables the vendor to continue with the contract notwithstanding a misdescription and limits the purchaser's rights in such circumstances to a claim to be paid (assuming he is taking less than he bargained for) compensation to be agreed or assessed by an arbitrator. The right is a right to be paid once the compensation has been assessed and does not allow the purchaser to hold up on completion. I reach this conclusion for the following reasons:

Mr. Marshalleck argued strongly against such a construction. He referred me to the fact that in equity where there is a misdescription of land in a contract it is well established that a purchaser can obtain specific performance of the agreement whereby the vendor is obliged to convey what he has and submit to a reduction in the purchase money and this reduction is frequently referred to as "compensation". The simple answer to this point is that we are dealing here with an express provision which is presumably designed to increase the rights of the vendor and that the word "compensation" is used together with the words "to be paid" and not "to be allowed". He also points to the difficulty involved in inserting the full purchase price in the standard form conveyance from a stamp duty point of view. I do not believe that such taxation considerations, which must be collateral, can influence the proper construction of the agreement. In any event, the answer to the point is surely that if the purchaser is obliged to pay more duty than he should because the land transferred is less than contracted for, this can be reflected in the compensation assessed by the arbitrator under clause 9. In any event, I cannot believe that any such practical difficulties would be insuperable and I note in this connection Mr. Barrow's sensible offer which I refer to above in paragraph 4, which must presumably have involved the insertion of the full purchase price in the standard form conveyance.

9. It is axiomatic that to succeed in a claim for damages for delay in completion a purchaser must show that he himself was ready to complete the contract at the relevant time (see p. 588 Barnsley). On my construction of the sale contract, it was necessary for the Plaintiffs to be ready to pay the full balance of the purchase money to Mrs. Rochon before they could insist on completion by her. The fact is that the clear position taken by the Plaintiffs in the letters of 8 and 30 September, 1993 and 5 and 19 October, 1993 and by Mr. Barrow when he made his offer to Mr. Courtenay and in the aftermath of the decision of Sir George Brown in June 1994 was that they would not pay her the full balance (or indeed, apart from in the proposal made to Mr. Courtenay, any money at all) until the level of compensation had been fixed. In my judgment, they were therefore themselves expressing an intention not to be bound by the contract and they cannot therefore maintain an action against the Defendant in respect of her failure to convey the 20 acres to which she had title.

10. But even if I am wrong in saying that the Plaintiff was obliged to tender the whole balance of the purchase money for payment, I still do not believe that they can claim damages for delay on the part of the Defendant. If I am wrong in my construction of the agreement, and completion does not have to take place until the compensation has been agreed or assessed by an arbitrator, there is no breach by the Defendant of the obligation to complete until that agreement or assessment is made. Mrs. Rochon completed once agreement had been reached on the figure for compensation. But, says Mr. Marshalleck, the delay (at least from October 1993 to June, 1994) had nothing to do with fixing compensation but everything to do with Mrs. Rochon's stubborn refusal to accept that there was a misdescription in the contract The answer to this point is that on either view of the contract it would have been open to the Plaintiffs to take a conveyance of the full 26 acres (if necessary, without prejudice to their rights under clause 9) from the Defendant at any time during this period. Since by 14 October, 1993 they knew that they would own the six acres in any event, this could not cause them any difficulty in relation to obtaining clear title to the 26 acres and, as I have already found, it would not have precluded the (already commenced) claim for compensation under clause 9. Mrs. Rochon's stubborn refusal did not prevent the Plaintiff completing and the only useful purpose of the vendor and purchaser summons (which is what held matters up) in relation to the contract was that it established the basis for the claim for compensation under clause 9 which was then agreed and allowed. For all these reasons, I therefore reject the Plaintiffs' claim for damages for delay in completion.

11. Strictly speaking, the question of damages does not arise. But, in case I am wrong on the question of liability, I will make the following findings in relation to it:

12. I raised with Mr. Marshalleck the question whether, notwithstanding its losses, the Plaintiffs would have been prevented from recovering them by the rule in Bain v Fothergill. At one point I understood him to be submitting that that rule did not apply in relation to a claim for delay because in any delay case completion has already taken place. I reject any such submission which appears to be inconsistent with the opinions expressed by the House of Lords in Raineri v Miles [1980] 2 All ER 145 (a delay case where admittedly the rule in Bain v Fothergill did not arise but in which it was clearly assumed that it would apply: see passages at pp.159 d, 161 j - 162 c and 164 d - g). The rule in Bain v Fothergill would operate where the vendor's delay in completion was caused by want of, or a defect in title or conveyancing difficulties, not caused by the vendor's own fault. It occurred to me at one point that the vendor's want of title to the six acres was caused not by the vendor's fault but by the Plaintiffs' own deliberate action in preventing her from acquiring the six acres from the Government, but Mr. Marshalleck persuaded me that those events were collateral and not relevant to the issue. He also persuaded me that the rule did not apply because, in the light of clause 9, there was in fact no want of or defect in title (and any conveyancing difficulty was of her own making). I think he was right to say that clause 9 meant that the inability to make out title to the six acres did not involve a want of or defect in title to the land contracted to be sold. But this only serves to confirm the views I have already reached in relation to liability at paragraph 10 above.

13. The Defendant as I have said, was ready to complete on 24 August 1993. She incurred costs in coming from Canada and attending the office of Mr. Barrow but completion did not take place because the company did not have funds. Mr. Marshalleck did not seriously oppose a finding of liability to pay damages representing these costs (though he challenged their quantum). I have nevertheless considered whether she was herself in a position to complete on that day given the misdescription in the contract. I think the answer is that Mrs. Rochon was willing on that day to execute a conveyance which would have been satisfactory to all parties. If she had done so, it would have operated to convey all the estate she did have (i.e. 20 acres) and the Plaintiff would, on discovering the problem, have been entitled to compensation under clause 9. I think, therefore, that Mr. Marshalleck is right to accept that the company must pay damages to her to reflect her wasted expenditure on that day. The items of expenditure put forward were not challenged as such, but, unfortunately, because of a misunderstanding between counsel, they were not dealt with in evidence in spite of the fact that there may have been points to raise as to recoverability of all the items. I therefore assess damages under this head at only $2,000.

14. The claim shall be dismissed. There shall be judgment on the counterclaim for $2,000. Unless the parties wish to make submissions on costs, I shall order the Plaintiffs to pay Mrs. Rochon's costs to be taxed if not agreed.