Willard Clarke Enterprises Ltd et Al v Oceania Heights Ltd; Bowe et Al v Oceania Heights Ltd; Burrows v Oceania Heights Ltd

• Jurisdiction: Bahamas
• Judge: Blackman, J.A.,Newman, J.A.
• Judgment Date: 27 July 2010
• Neutral Citation: BS 2010 CA 154
• Docket Number: SCCiv/App No. 123 of 2008; SCCiv/App 124 of 2008; SCCiv/App No. 126 of 2008
• Court: Court of Appeal (Bahamas)
• Date: 27 July 2010

Court of Appeal

Blackman, J.A.; Newman, J.A.; John, J.A.

SCCiv/App No. 123 of 2008; SCCiv/App 124 of 2008; SCCiv/App No. 126 of 2008

Willard Clarke Enterprises Limited et al

and

Oceania Heights Limited

Bowe et al

and

Oceania Heights Limited

Burrows

and

Oceania Heights Limited

Appearance:

Mr. Elliott Lockhart with Ms. Gia Moxey for the appellants in 123 of 2008.

Mr. Charles Mackay for the appellants in 124 of 2008.

Mr. Harvey Tynes Q.C with Ms. Gina Morley1 and Ms. Tanisha Tynes for the appellant in 126 of 2008 and Ms. Tracy Fergusson for the respondent.

Contract Law - Appeal — agreement for sale of land — illegality — non-compliance with statutory provisions — contracts contrary to law not enforceable — illegal transaction — public policy consideration — imposition of a penalty by statute on parties to a contract — enforcement of the penalty as the remedy for infringement of statutory provisions — privity of contract — Sections 5 and 7 of the Private Roads and Subdivisions (Out Islands) Act.

Blackman, J.A.

1 These appeals challenge the judgment by Lyons SJ dated the 29th August 2008 that the contracts or agreement for sale of lots in the Willard Heights Subdivision on Great Exuma by Willard Clarke Enterprises Ltd (Willard) to the appellants are void for illegality and of no effect by reason of non-compliance with the provisions of sections 5 and 7 of the Private Roads and Subdivisions (Out Islands) Act (the Act).

BACKGROUND TO THE APPEALS

2 Willard as owner of some 40 acres of land on Great Exuma subdivided the land into 121 lots. Sub-division approval for the said lots was granted in principle by letter dated 2nd March 1970 from the Permanent Secretary, the Ministry of Works to Mr. Willard Clarke which stated at the outset that “I am directed to inform you that subject to the payment of fees (emphasis added) mentioned in paragraphs 7(d) and 8 below, the Minister of Works is prepared, in terms of section 3 of the Act to approve the layout of the subdivision referred to in your application of December 1968.”

3 Consequent to that letter, Willard and /or its agents entered into agreements for sale with the several appellants to sell various lots. On 25th September 1995 Willard agreed with Oceania to sell to Oceania the land on Great Exuma excluding the eleven lots described in the Schedule to the Agreement as lots 23, 27, 28, 29, 31, 32, 34, 35, 106, 107 and 121 (the excluded lots) in respect of which agreements had been made with the appellants and for which payments either in full or on account were being made.

4 At paragraph 16 of the said agreement Oceania acknowledged that the excluded lots did not comprise a part of the land agreed to be sold and Willard covenanted to assign the benefit of any contracts or agreements for the sale thereof to Oceania and to provide Oceania with any information it may request pertaining thereto.

5 In January 1996 Willard entered into a further agreement for sale with Oceania with respect to the entirety of the 40.02 acres of land, which agreement was back- dated to the 25th September 1995 and was recorded at Volume 6609 at pages 139 to 147 in the Deeds Registry. There was a further agreement dated 5'h January 1996 and made between Oceania of the First Part, John Marshall (Marshall) of the Second Part and Willard of the Third Part expressed to be supplemental to the (second) agreement dated 25th September 1995. In that January 1996 agreement, it was recited that Marshall as President of Willard having negotiated the sale of the excluded lots to persons, including the appellants described therein as “the intended purchasers” and that deposits had been received for the sale and purchase of the said lots, Oceania undertook to refund all monies paid to Marshall or Willard.

6 The January 1996 agreement further provided that should an intended purchaser make a claim in respect of any of the excluded lots or instituted action against Marshall or Willard then Oceania will be “fully responsible for meeting all legal and other costs, liabilities and expenses incurred by Marshall as a result thereof until the matter is resolved, and if he is deemed to be liable in any manner to the intended purchaser then Oceania will pay any such liability or sum ordered or found due and payable.”

7 On 25th February 2000, Willard executed conveyances to the appellant Burrows in respect of lots 31 and 32 and to the appellant Coastline Company Limited in respect of lots 106 and 107; and on 6th March, 2000 a conveyance to the appellant Linton Gray in respect of lot 27. On 8th March 2000 Willard executed a conveyance for lots 28, 29, 34 and 35 to the appellants Bowe. The conveyance to the appellant Weech for lots 23 and 121 was executed on the 22'd February 2001.

8 Willard conveyed to Oceania on 20th March 2000 all the lots in the Willard Heights Subdivision Excepting the excluded lots enumerated in paragraph 2 of this judgment. Sometime in the year 2000 Oceania commenced legal proceedings against the seven appellants/ defendants, seeking against the first appellant/defendant Willard (1) an order for specific performance of the second agreement (2) damages in addition to or in lieu of specific performance, (3) further or alternatively, damages for breach of contract. With respect to the second through seventh appellants/defendants, Oceania sought a Declaration that the conveyances made to them were void and of no effect, and further for an Order that the Conveyances be set aside.

9 The action was heard before Lyons SJ over 2 days in late July 2008. On August 29th 2008, in a reserved judgment, the learned judge at paragraph 61 held that: “In my judgment the plaintiff is entitled to a conveyance of the land described in the final (second) agreement,” and further declared at paragraph 63: “that the contracts or agreements for sale or disposition as between the first defendant and the second through seventh defendant are void ab initio as being illegal.”

10 The appellants in their appeals have sought the following orders, namely that:

• i. The agreements and dispositions between the 1st appellant (Willard) and the 2nd 3rd 4th 5th 6th and 7th appellants are valid and enforceable and the subsequent Conveyances arising therefrom free from encumbrances;

• ii. The first agreement dated the 25th September, 1995 [2008] (sic) between the 1st appellant and the respondent and the Conveyance arising therefrom is valid;

• iii. The final agreement dated the 25th September, 1995 [2008] is unenforceable and ought to be set aside;

• iv. The respondent be made to pay the costs of the appeals.

11 In support of the relief sought, the appellants advanced the following grounds of appeals, which though framed in slightly differing language were in the following terms: [a] That the learned trial judge erred in law and in fact in construing the Private Roads and Subdivisions (Out Islands) Act as he did; [b] The learned trial judge erred in law and in fact in expressly or impliedly determining that the respondent/Plaintiff as a third party had the right to challenge the contracts between Willard and the other appellants as being illegal when there was no privity of contract between the appellants and the respondent; [c] The learned trial judge erred in law and in fact in using his discretion in granting declaratory relief to the respondent as the respondent acted with full knowledge of the appellant's contractual arrangements with the said Willard Clarke Enterprises Limited and its beneficial owner.

THE APPEAL

GROUND ONE: THAT THE LEARNED TRIAL JUDGE ERRED IN LAW AND IN FACT IN CONSTRUING THE PRIVATE ROADS AND SUBDIVISIONS (OUT ISLANDS) ACT AS HE DID.

12 Miss Tracy Fergusson, Counsel for the respondent submitted that having regard to the provisions of Sections 5 and 7 of the Act the learned trial judge was justified in the decision reached and in the declarations which he had made. Moreover, she contended that the appellants at the time the conveyances were issued to them in 2000 must be deemed to have notice of the respondent's interest in the land, as the Agreement of 1995 had been recorded.

13 Section 5 of the Act provides that:

“5. No owner shall sell, agree to sell, convey, agree to convey, demise or agree to demise any land in a new subdivision unless the approval of the Minister has been given under section 4 of this Act and either –

• (a) he has furnished the Minister with a bond executed by two or more sufficient sureties approved by the Minister in a sum not exceeding the estimated cost of the proposed works plus twenty per centum therefore to be fixed by the Minister and has entered into an agreement with the Minister for the proper construction of roads to and in such sub-division according to the supply of electricity, water and other utilities to and throughout such sub-division according to the specifications approved by the Minister and the supply of electricity, water and other utilities to and throughout such sub-division as may be required by the Minister within such period as the Minister may fix; such bond to be conditioned to be void upon the owner of the subdivision, within the period fixed by the Minister, so constructing such roads to the satisfaction of the Minister all works necessary to provide electricity, water or other utility to and throughout such subdivision as may have been required by the Minister; or

• (b) he has to the satisfaction of the Minister constructed roads to and in such sub-division according to the specifications approved by the Minister and has completed to the satisfaction of the Minister all such works as may be necessary to facilitate the supply of electricity, water or other utility to the sub-division as may have been required by the Minister.

14 Section 7 further stipulates that:

“No person shall, without the approval of the Minister sell or agree to sell, convey or agree to...