Shad Aina Moncur v Alvin Jack

• Jurisdiction: Bahamas
• Judge: Smith, JA
• Judgment Date: 17 December 2024
• Neutral Citation: BS 2024 CA 170
• Docket Number: SCCivApp. No. 190 of 2023
• Court: Court of Appeal (Bahamas)

Between

Shad Aina Moncur

Appellant

and

Alvin Jack

First Respondent

and

Theda Jack

Second Respondent

BEFORE:

The Honourable Madam Justice Crane-Scott, JA

The Honourable Mr. Justice Smith, JA

The Honourable Mr. Justice Turner, JA

SCCivApp. No. 190 of 2023

IN THE COURT OF APPEAL

Civil Appeal — Contract Law — Specific Performance — Agreement for Sale — Breach of Contract — Option to Purchase — Apportionment of Payments — Mortgage Satisfaction — Judicial Discretion — Equitable Remedies — Hardship

Held: Appeal allowed in part. The decision on the validity of the Agreement upon payment of the deposit is affirmed. The decision on specific performance is set aside and remitted to the trial judge for rehearing. Each party is to bear its own costs for the appeal and the proceedings before the trial judge.

The Court found that the trial judge correctly concluded that the option to purchase was validly exercised upon payment of the deposit, and affirmed the trial judge's decision regarding challenges to the validity of the Agreement, the exercise of the option, and the treatment of the Agreement as one for the sale of land.

However, the Court found that the decision of the trial judge to order specific performance of the Agreement upon terms was based on certain errors of fact.

As a result, the Court remitted the issue of specific performance to the trial judge for rehearing.

Loveridge and Loveridge v. Healey [2004] EWCA Civ 173 considered

Mcphilemy v. Times Newspapers Ltd. [1999] 3 ALL ER 775 considered

Nada Fadil Al Medenni v. Mars U.K Ltd. [2005] EWCA CIV 1041 considered

APPEARANCES:

Ms. Christina Galanos, with Ms. Kristina Saunders, Counsel for the Appellant

Ms. Tanya Wright, Counsel for the Respondents

Smith, JA

Judgment delivered by The Honourable Mr. Justice

INTRODUCTION

1 The Appellant (the “Vendor”) and the Respondents (the “Purchasers”) were members of a church. They entered into a hastily and poorly drafted agreement for sale and lease of a property. This agreement was intended as a road map to enable the Purchasers to live in the property and eventually to become the owners of the property.

2 Once the parties were in amity and reposed trust and confidence in each other, the agreement may have fulfilled its objective. However, when as happened here, the amity, trust and confidence broke down, the agreement with its inherent contradictions and uncertainties became a minefield and led to this action by the Purchasers against the Vendor.

3 This litigation itself appears to have been convoluted and unfocused and the trial judge, to his credit, attempted to clear a path through the minefield and quagmire which was presented to him.

4 The trial judge decided, in summary, to order specific performance of the agreement for sale upon certain terms and conditions.

5 The Vendor has appealed this decision and has advanced 13 grounds of appeal. At the hearing of the appeal, the Vendor abandoned 1 ground of appeal and accepted that the last 2 grounds of appeal were general grounds upon which no specific submissions were advanced.

6 Upon consideration of the oral and written Submissions of the Vendor and Purchasers, I would uphold the trial judge's decision as to the validity of the agreement for sale upon the payment of a deposit of $ 10,000.00 by the Purchasers. However, I would refer the issue of the remedy of specific performance upon terms back to the Supreme Court.

7 Further, I find that both sides were successful to some extent on the appeal, and I would order that each side bears its own costs of the action in the Supreme Court and in the Court of Appeal.

BACKGROUND FACTS

8 The Vendor is the owner of a house on a parcel of land situated at lot number 119 Jubilee Gardens, New Providence. This land was subject to a first demand mortgage held by the Bahamas Mortgage Corporation (the “Mortgagee”).

9 On 14 July 2015, the parties entered into an agreement (the “Agreement”) whereby the house was ostensibly “leased” to the Purchasers with an option to purchase. The Agreement also contained terms including an option price and a down payment which suggested that the parties had also agreed to the terms of a sale/purchase.

10 Some of the relevant terms of the Agreement were as follows:

“ C. Option to purchase: In consideration of the Lessees meeting all obligations under this lease, the Lessor hereby grants the Lessees an option to purchase under the following terms and condition.

i. The option price is $150,000.00 (one hundred and fifty thousand) dollars in the currency of the Commonwealth of the Bahamas.

ii. The terms of the purchase have been agreed as a down payment of $10,000.00 (ten thousand Dollars) (receipt of which the Lessor acknowledges) a monthly payment of $1,200.00 (twelve hundred per month representing rent and a consideration towards the price of the property if, Lessees exercises this option to purchase. In the event Lessees fail to exercise the option or default under any terms of the lease, the option will be void and all monies will be retained by the Lessor as rent and not as a penalty.

Rent is payable by the 28 day of each month to the lessor or her authorized agent.

iii. If lessees fail or is unable to meet any of the obligations set forth in the lease option agreement, the agreement may fail unless favorably considered by the lessor.

iv. Lessees understand that time is of the essence in this agreement. The option to purchase will expire on or before the end of 96 months (8 years) and be of no further effect if not exercised on or before the commencement date unless extended by the lessor.

v. The option shall be exercised by mailing or delivering written notice to the Lessor prior to the expiration of this agreement.

vi. This purchase option is not conditional upon the Lessees ability to obtain financing from a lender, or if conditional then only with the approval of the lessor.

D. (1) The term shall commence on the 1st August 2015 and continue for a period of 8 years unless payment in full is realized before that date when the term will be realized earlier.” [Emphasis added]

11 During the period June 2016 - March 2019, the Purchasers came into possession of 3 letters from the “Mortgagee. These letters were addressed to the Vendor but delivered to the address of the house occupied by the Purchasers. The Purchasers opened these letters. The letters were notifications to the Vendor of default in the payment of the mortgage installments, the consequent accumulation of arrears and a request for payment of the arrears. The last letter dated March 2019 also threatened a sale of the property in default of the settlement of the arrears.

12 The Purchasers forwarded these letters from the Mortgagee to the Vendor and on 10 April 2019, instructed their attorneys to write to the Vendor. In that letter, the attorney for the Purchasers demanded to be shown receipts for the payment of the outstanding mortgage arrears and demanded confirmation that the balance on the mortgage was less than $100,000.00.

13 The demands of the Purchasers were refused. The Purchasers responded by paying the entirety of the monthly “lease rental” sum of $1,200.00 directly to the Mortgagee, following which the Vendor, on 10 May 2019, served the Purchasers with an eviction notice which required the Purchasers to vacate the property within 60 days.

14 Following the eviction notice, the Purchasers commenced an action in the Supreme Court against the Vendor in which they obtained an interlocutory injunction against the Vendor. By this injunction, the Vendor was prevented from evicting the Purchasers. The Purchasers also continued to pay the monthly sum of $1,200.00 directly to the Mortgagee until 2 June 2020, when a judge ordered that this sum be paid directly to the Vendor. That judge also ordered that all mail addressed to the Vendor be made available for collection by the Vendor, unopened.

15 The matter eventually proceeded to trial. At trial there was a the sharp conflict on important questions of fact and law such as:

(i) The knowledge of the Purchasers of the existing mortgage on the property before they entered into the agreement with the Vendor.

(ii) The meaning and effect of the option to purchase in the agreement for sale.

(iii) The application of the monthly sum of $1200.00 towards rental of the premises and towards the purchase price of the property.

(iv) The consent of the Vendor to the opening of mail.

(v) The implication of terms into the agreement.

(vi) Who was in breach of the agreement for sale?

16 This sharp conflict between the parties was rendered problematic by the inherent contradictions in the Agreement and, even more so by the decision of Counsel for the Purchasers not to cross examine the Vendor.

THE DECISION OF THE TRIAL JUDGE

17 After hearing the evidence and submissions of Counsel for the Purchasers and the Vendor, the trial judge came to the following main decisions:

(i) The Purchasers signed the agreement with full knowledge that the property was subject to a mortgage (see paragraph 29 of the judgment)

(ii) The agreement between the parties was not merely a rental agreement, but an agreement to purchase the property with an option to purchase once the down payment of $10,000.00 was made this was to be followed by monthly payments of $1,200.00 which would go towards the purchase price or with the payment going to the Vendor if the agreement should fail. (see paragraph 30 of the judgment)

(iii)To give business efficacy to the agreement, It was necessary to imply 2 terms into the agreement for sale, namely;

(i) That the Vendor would pay the mortgage

(ii) That the Vendor would not do anything to place the property in jeopardy of foreclosure by the mortgagee. (see paragraph 38 of the judgment)

(iv) The Vendor breached those implied terms on at least the 3 occasions when the mortgagee...