Belitza Marling Sagaray Silva v Replay Destinations (Bahamas) Ltd

• Jurisdiction: Bahamas
• Judge: Mr. Justice Loren Klein
• Judgment Date: 10 June 2020
• Court: Supreme Court (Bahamas)
• Docket Number: 2019/CLE/gen/00734

Between:

Belitza Marling Sagaray Silva

Plaintiff

and

Replay Destinations (Bahamas) Ltd.

Defendant

Before:

The Honourable Mr. Justice Loren Klein

2019/CLE/gen/00734

IN THE SUPREME COURT

Common Law and Equity Division

Law of Property Conveyancing (Condominium) Act, 1965 — Vendor and Purchaser Summons — Agreement for Sale of Unit in Condominium Complex — Notice to Complete — Validity of Notice — Validity of Defendant's title — Good and marketable title — Description of Property — Size of unit substantially larger than description in Declaration of Condominium — Diagram exhibited to Agreement identifying Unit as 6,165 sq. ft. — Declaration listing Unit as 4,801 sq. ft. — Rescission of Sales Agreement on contractual grounds — Claim for Return of Deposit — Whether Agreement effectively rescinded — Whether plaintiff entitled to return of deposit — Title Commitment Insurance — Contractual interpretation — Implication of terms — Waiver of right to challenge title

Appearances:

Mr. Kevin Moree, with Mr. Andrew Smith for the Plaintiff

Mr. Raynard Rigby with Ms. Shade Munroe for the Defendant

RULING

INTRODUCTION AND BACKGROUND

Introduction

1 At the heart of this dispute is a discrepancy of some 1,300+ square feet. It is the approximate difference in the size of a luxury penthouse advertised for sale in an exclusive condominium complex on Paradise Island called the One Ocean Condominium (“One Ocean”) after extensive renovations and the dimensions recorded in the statutory declaration containing the certified architectural drawings and plans of the building (the “Declaration of Condominium”). This discrepancy led the plaintiff (the purchaser) to rescind the agreement for sale over concerns that the defendant (the vendor) was unable to convey good title to the unit and has resulted in this litigation.

2 The case at bar is part of a litany of legal issues that have affected the sales of units of One Ocean owing to concerns about the accuracy of the Declaration. These are thought to arise from changes to the original design when the building was constructed without corresponding amendment to the Declaration and/or changes in the size and configuration of units following extensive renovations undertaken by the ‘second’ developer, Replay Destinations Ltd. (See, in this regard, the decision of Winder J., in One Ocean Association v. Qamea Stanley and ors., 2020/CLE/gen/00385, unreported, 20th December 2021, cataloguing some of these deficiencies and granting an order to amend the Declaration on the application of the One Ocean Association (“the Qamea decision”)). I shall refer to this case again, as it has some significance for this matter.

3 The claim also illustrates the unique complications that can arise from transactions involving the peculiar legal estate of fee simple ownership of property in a multi-storey building. This form of real property interest, also called “strata” title in some parts of the Commonwealth, owes it origin exclusively to statute—specifically the law of Law of Property (Condominium) Act 1965 (the “Condominium Act”)—and it might be said that in this jurisdiction only the Quieting Titles Act has been productive of greater mischief in the law of real property.

Summary of salient facts

4 In a nutshell, the application arises out of the following facts. On the 19 July 2018, Belitza Marling Sagaray-Silva (the plaintiff and “purchaser” in this action) entered into an Agreement for Sale (“Agreement”) with Replay Destinations (Bahamas) Ltd. (the defendant and “vendor”) for the purchase of Penthouse 901, One Ocean Condo Place Condominium, Paradise Island. For convenience, the parties will be variously referred to as the plaintiff or purchaser, and defendant or vendor.

5 The penthouse was offered for sale at US$ 4,100,000.000, of which $410,000.00 was paid as a deposit. Unit 901 was undergoing extensive renovations while it was being marketed and was advertised as containing 6,165 sq. ft. of living space. However, the Declaration registered under the Condominium Act described it as comprising 4,801 sq. ft.

6 The transaction failed to close within the original timeframe, but the Agreement provided for its continuance unless one of the parties issued a notice to complete (“NTC”). The purchaser issued a notice to complete on 8 February 2019, identifying four issues that were said to be in default and giving the vendor until 1 March 2019 (21 days from the notice) to make good the default. The material terms of that notice were as follows:

• “2. The Vendor has made default in complying with its obligations under the said Agreement in that it has ( inter alia)

  • (a) failed to close by 28th August, A.D., 2018;

  • (b) failed to remedy all items/outstanding items set forth in the current Inspection Statement (aka Punch List and hereinafter referred to as the “ Punch List”)); [ issue was withdrawn by Plaintiff's Counsel]

  • (c) delivering a Temporary Certificate of Occupancy; [ issue was withdrawn by Plaintiff's Counsel]; and

  • (d) failed to meet Requirement 6(a) of the Title Commitment dated 2nd day of August, A. D., 2018 or have such Requirement removed therefrom.

• 3. The Purchaser hereby requires the Vendor forthwith to make good such default by closing prior to the termination of this notice, by completing all items/outstanding matters set forth … and providing a Title Insurance Commitment having met or having removed requirement 6(a) therefrom, subject as provided in the said Agreement but otherwise free from encumbrances delivering the assurances as provided in the said Agreement and completing the sale of the Property.

• 4. If the Vendor fails to comply with this Notice by Thursday the 1st day of March, 2019 being Twenty-one calendar days from the date hereof, then in accordance with Clause 5 of the said Agreement the deposit paid to Winter Borghardt Chambers in the sum of US$410,000.00 shall be returned immediately to the Purchaser and thereupon the Agreement will be terminated and canceled in full and final satisfaction of this matter.

7 A flurry of emails and other correspondence passed between the respective representatives of the purchaser and vendor during the period between the service of the notice and the termination of the contract.

8 On 1 March 2019, at 5:00 p.m., the attorneys representing the purchaser (King & Associates) sent an email to, among others, the agent for the vendor and stakeholder (Mr. Jan Borghart) as well as the attorneys for the One Ocean Homeowners Association (“the Association”) (Glinton Sweeting O'Brien). That email stated that the notice to complete had expired at 5:00 p.m. that day and the vendor had failed to complete, in that it had, inter alia:

• “1. Failed to deliver a good and marketable documentary title to the Unit;

• 2. Failed to deliver a Title Commitment free from requirement Six (a) of the Title Commitment for further amendments to be made to the Declaration of Condominium;

• 3. Failed to deliver a Title Commitment that provides good title to the entirety of square footage contracted to be purchased on the correct unit entitlement to the unit;

• 4. Failure to deliver a Temporary Occupancy Certificate: and

• 5. Failed to complete all the items set forth in the Punch List.”

9 It concluded by saying that the purchaser was looking forward to the return of the deposit within 7 days, failing which they would resort to litigation “ without adieu”.

10 By reply letter dated 5 March 2019, the managing director of Replay, Mr. Michael Sneyd, disputed the contention that the vendor had not completed in accordance with the NTC. He characterized the email of the 1 March as “ a blatant attempt …to exit a binding Agreement for Sale”. Replay therefore refused to return the deposit.

11 Notwithstanding that the parties had drawn a line in the sand, it appears there was some attempt to salvage the Agreement, and the purchaser conducted one final inspection of the premises on 6 March 2019. Following this inspection, Mr. Paul King of King & Associates issued an email that day stating “ This matter, our client's patience and trust are no longer salvageable.” That email also responded to Mr. Sneyd's letter of 5 March and pointed out what the purchaser considered to be the outstanding issues as follows:

“The Vendor has not provided good fee simple documentary title to the Unit as advertised and proposed as it does not own the entirety of the Unit. It is that simple.

The description of the unit in the declaration is 4,767 square feet. The advertised and purported size of the Unit pursuant to the Agreement for Sale is 6,105 square feet. This is a 22% difference and in anyone's book is a material issue.

The owner of this additional square footage of 1,398 square feet is, and remains, One Ocean Property Owner's Association.”

12 Replay responded by letter dated 13 March 2019, disputing the purchaser's contentions and maintaining that it had fully complied with the notice:

“A few corrections to your assertion: the original Declaration of Condominium, dated 11 May 2005, lists the area of Unit 901 at 4,737 square feet; the Amendment of Declaration of Condominium, dated 18 January 2010, lists the area of Unit 901 at 4,801 square feet. Both these areas are wrong. The certified architectural area for the unit is 6,419 square feet. Therefore, your client would actually receive more area that they agreed to acquire. […]

This area calculation mistake will be corrected in a joint application to the court by Replay and the One Ocean Association.” [Underlining supplied.]

13 By Originating Summons filed 29 May 2019, pursuant to s. 4 of the Conveyancing and Law of Property Act (Ch. 123), the plaintiff sought the following declarations and orders:

• “1. A Declaration that Belitza Marling Sagaray Silva (“the Plaintiff”) has effectively rescinded and/or terminated the Agreement for Sale dated 19 July 2018 (“the Agreement...