Barbara Gayle, Staff Reporter
BEVAD Ltd., which had agreed to sell an apartment to Park Traders (Jamaica) Ltd. for $450,000 in 1989, but sold it instead to another company, has been ordered by the Court of Appeal to pay Park Traders $2.6 million for wrongful termination of the contract.
In 1989 Bevad Ltd. was involved in the development of an apartment complex known as Old Church Court, Drumblair, St. Andrew. Stanford Cocking, the managing director of Park Traders, a real estate development and rental company, went to the offices of attorney Jennifer Messado on June 14, 1989 and paid her a cheque for $75,000 which was the required deposit on the sale price of one of the apartments at Old Church Court. Mrs. Messado was representing the interest of Bevad Ltd.
Mr. Cocking said it was a cash sale and at the end of the sale Citizen's Bank (now Union Bank) would pay Mrs. Messado.
By letter dated August 31, 1989, the bank wrote Jennifer Messado and Company undertaking to pay $375,000 on behalf of Park Traders upon receipt of the duplicate certificate of title for 1B Old Church Street, Drumblair. The bank stated that the undertaking expired December 31, 1989.
By letter dated June 19, 1989 Mrs. Messado wrote to Park Traders' lawyers Broderick and Graham informing them of the first deposit of $75,000 received from Park Traders and that the second deposit was due and payable 60 days from June 19, 1989. She also sent the agreement for sale to be executed by the purchasers. On July 31, 1989 she wrote to Broderick and Graham complaining that the agreement for sale had not been signed. There was no response to that letter and Mrs. Messado wrote another letter to the lawyers on September 13, 1989, informing them that they had the agreement for sale. The letters were all ignored by Broderick and Graham, the Court of Appeal said last week Thursday.
A notice dated January 16, 1990 making time of the essence of the contract was sent to Broderick and Graham in which Park Traders was required to complete the agreement by paying the balance of the purchase price within 14 days of the date thereof. "However, the receipt of the notice making time of the essence of the contract appeared to have had an immediate catalytic effect because by letter dated January 18, 1990, Broderick and Graham wrote to Mrs. Messado stating that both the executed agreement for sale and transfer were enclosed," the Court of Appeal said. The letter from Park Traders' lawyers stated that an extension of the undertaking from Jamaica Citizens Bank and the cheque for half costs would follow shortly.
The Court of Appeal said it would seem that no executed instrument of transfer was sent to Mrs. Messado as stated in that letter. Mrs. Messado wrote to Broderick and Graham on January 19, 1990, informing them that there was no agreement in place for the purchase of the apartment because the agreement for sale was never signed by the vendor. She also pointed out in the letter that the letter of undertaking from the bank for the incorrect sum of money expired on December 31, 1989.
In a letter dated January 29, 1990, the bank sent another undertaking in terms similar to the earlier one and the undertaking was to expire on March 30, 1990. On January 30, 1990, Bevad Ltd. informed Broderick and Graham that in view of the fact that the notice making time of the essence had expired, it was terminating the contract and refunding the deposit. The bank's undertaking was returned on January 31, 1990. On February 26, 1990, the apartment was sold to TransOcean Shipping Ltd. for $600,000. Park Traders had lodged a caveat against the property on January 8, 1990.
Park Traders filed a suit in the Supreme Court in July 1990 seeking specific performance in respect of the contract in relation to the apartment. In the alternative there was a claim for damages in breach of contract. Park Traders' suit was dismissed as the judge held that the contract for the sale of the premises was properly rescinded by Bevad Ltd.
Bevad Ltd. and TransOcean Shipping were the defendants. Park Traders appealed the ruling.
The Court of Appeal comprising Ian Forte, President of the Court of Appeal, Mr. Justice Paul Harrison and Justice Howard Cooke heard the appeal. In the judgment written by Justice Cooke, the court held that the trial judge was in error when he held that the sale agreement dated January 22, 1990 was a memorandum. "It was the contract by which the parties were to be bound," the court held last week Thursday.
Donald Scharschmidt, Q.C. and Christopher Malcolm, instructed by John G. Graham and Co. who represented Park Traders, argued on appeal that the date of the purported termination of the contract on January 30, 1990, was before the time prescribed by the notice making time of the essence, had expired. (John Graham was formerly with Broderick & Graham). They argued that the notice did not expire until midnight January 30, 1990. The Court of Appeal upheld the submissions and added that the purported termination of the contract was of no effect.
The court said that having come to the decision that the purported determination of the contract by Bevad Ltd. was unlawful, it had to decide whether it should exercise its discretion to make an order for specific performance.
The court ruled that it would not make an order for specific performance because it was some seven months before the agreement of sale was executed and returned to Bevad Ltd. "Mr. John Graham of Broderick and Graham, in his evidence, candidly and rather euphemistically said that the matter could have been "dealt with more expeditiously." Then there was a delay of six months after being informed that the agreement was terminated before the appellant filed its suit. This want of urgency militates against the award of specific performance," the court held.
The court said the delay of six months in the context of the circumstances was a bar to a decree of specific performance. The court ruled that consideration must also be given to the fact that TransOcean Shipping had paid for and been in possession of the apartment since 1990. It could not be said that TransOcean Shipping "did not at all times have clean hands," the court said. A caveat had been lodged against the property since January 8, 1990 but the court said, "however, as has been decided in this court, the lodging of a caveat is not notice to the world. It would not be just that the proprietary right which the second respondent now enjoys in respect of the apartment should be disturbed," the court held.
On the question of quantum of damages to be awarded, Pamela Benka Coker, Q.C. and attorney Lanza Bowen, instructed by Jennifer Messado and Co., who represented Bevad Ltd., had suggested that the loss of bargain should be calculated at the date of the breach. It was suggested that the award would be $150,000 which was the difference between the purchase price in the agreement for sale and the amount for which the apartment was sold. Mr. Scharschmidt, disagreed and submitted that at the trial in the Supreme Court the accepted valuation of the apartment was $3,108,000, therefore the loss of bargain must be the difference between the purchase price of $450,000 and the agreed valuation figure. He submitted further that the loss of bargain should be calculated at the date of judgment in which case the amount of damages would be $2,658,000.
The Court of Appeal upheld Mr. Scharschmidt's submissions and awarded Park Traders $2,658,000 in damages against Bevad Ltd. The court ordered that the caveat lodged against the property must be withdrawn forthwith. Bevad Ltd. was ordered to pay the costs of Park Traders Ltd. and TransOcean Shipping Ltd. which was represented by attorney Michelle Champagnie, of the law firm Myers Fletcher and Gordon.
