Frank Otto and Another v Elegant Estates Ltd
| Jurisdiction | Jamaica |
| Judge | Mangatal J |
| Judgment Date | 21 June 2013 |
| Neutral Citation | [2013] JMSC Civ 88 |
| Docket Number | CLAIM NO. 2007/HCV-3344 |
| Court | Supreme Court (Jamaica) |
| Date | 21 June 2013 |
[2013] JMSC Civ.88
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
CIVIL DIVISION
CLAIM NO. 2007/HCV-3344
Mr. Ransford Braham appearing on the 16 th and 17 th June 2011, and Mr.DavidBatts and Mrs. Daniella Gentles-Silvera appearing on the 5 th and 6 th December 2011, instructed by Livingston Alexander & Levy , Attorneys-at-Law for the Claimants.
Mr. Lawrence Haynes , Attorney-at-Law for the Defendant.
DAMAGES — BREACH OF CONTRACT — CONSTRUCTION OF JOINT VENTURE AGREEMENT
The Claimants (collectively referred to as ‘the Ottos’) are business persons and were at all material times the registered proprietors of lands registered at Volume 1309 Folio 687, Volume 1358 Folio 747 and Volume 1880 Folio 892 of the Register Book of Titles. The lands are hereafter collectively referred to as ‘Wedgwood’.
The Defendant Elegant Estates Limited (‘Elegant’) is a limited liability company with registered offices situate at No. 2B Ivy Green Crescent, Kingston 5.
On or about the 29 th July 2005, the Claimants and the Defendant entered into a written joint venture agreement (‘the JVA’). The JVA was subsequently amended by agreement between the parties and the Ottos state that the amendments are set out in a letter from Elegant to the Ottos dated 16 th January 2006.
In paragraph 5 of their Particulars of Claim, the Ottos plead that by the amended JVA it was agreed between the parties, among other things as follows:
‘i) The Defendant desired to carry out a development on 91 lots part of Wedgewood.
ii) The development to be carried out by the Defendant on Wedgewood comprised 81 detached 2 bedroom units and 20 studio apartments with all necessary infrastructure works in accordance with the architectural and engineering plans prepared by the Claimants (should state Elegant) (see Clause 1).
iii) The Defendant was to obtain a loan from the Jamaica Mortgage Bank in order to finance the redevelopment.
iv) The Defendant was to appoint an auditor to keep proper books of accounts for the development and ensure that such books of accounts were available for inspection by persons authorized by the Claimants (Clause 2a(iv)).
v) The Claimants were responsible for providing the lots in Wedgewood lots for sale and the sale price per lot was $886,000 (Clause 2b(iii)).
vi)The Defendant was to complete the development on/or before 12 months of the date of the JVA (Clause 3(iv)).
vii) The purchase moneys received from purchasers, legal fees, stamp duty, transfer tax, registration fees and other costs incidental to the sale were to be delivered to Livingston Alexander & Levy and disbursed as follows(Clause 3(5):
Firstly, $800,000.00 on each 2 bedroom unit and $672,000 on each studio to the Jamaica Mortgage Bank for the release of the Certificate of Title for the lot.
Secondly, the payment of $886,000.00 per lot to the Claimants as follows:
(a) an amount not less than $443,000.00 on completion of the sale;
(b) the balance outstanding plus $30,000.00 on each unit sold and interest on the total amount outstanding at the rate of twenty percent (20%) per annum from the date of completion of the sale of each lot and unit to the date of actual payment.
However all payments were to be made within twelve months of the date of the agreement;
(c) And balance (was) to be paid into an escrow account to be held jointly by the Defendant and the Jamaica Mortgage Bank (Defendant's letter dated 16 th January 2006).
(viii) The Defendant was solely responsible for the completion of the project and was expressly required to complete the project within 12 months of the date of the Joint Venture Agreement (as amended). Clause 3 (vi) of the Joint Venture Agreement (as amended) provided as follows:
‘In the event that the development shall not be completed within 12 months of the date hereof, all sums paid to the proprietors under clause 3(v) shall become payable by Elegant forthwith and shall bear interest at the rate of twenty percent (20%) per annum on the balance outstanding to the date of full settlement.’
(ix) The Claimants are entitled to determine the Joint Venture Agreement (as amended) if the Defendant is in breach of the Joint Venture Agreement (as amended) having given to the Defendant the relevant notice (Clauses 3(14) & 3(16).’
The Ottos allege that Elegant, in breach of the JVA failed to carry out the development in an expeditious and/or timely manner and/or failed to complete the project within 12 months or at all. Further, that the project to date remains incomplete.
The pleading continues, that through their attorneys-at-law by letter dated 17 th January 2007 they duly notified Elegant that it was in breach of the JVA (as amended) and gave Elegant ninety(90) days to rectify the said breaches.
It is the Ottos' case that notwithstanding the provisions of the JVA (as amended) Elegant failed to permit them or their servants or agents to inspect the books of account in respect of the development.[
The Ottos aver that consequent on Elegant's breach, they have suffered loss and damage and been put to expense as follows(pages 6-7 of the Particulars of Claim:
‘PARTICULARS OF LOSS AND DAMAGE
(To June 30, 2007)
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(1) Payment of the sum of $70,593,197.29.
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(2) Damages for breach of contract.
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(3) Interest at the rate of twenty percent (20%) per annum. pursuant to Clause 3(6) of the Joint Venture Agreement (as amended).
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(4) An account of sums received and paid by Defendant on account of the Wedgewood development.
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(5) Costs.
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(6) Any or further relief.’
| A. 80 Single Unit lots @ $886,000.00 each------ | $70,880,000.00 |
| B. 11 Lots for 20 Apartments @ $886,000 each------ | $ 9,746,000.00 |
| C. 100 units @ $30,000.00 each------ | $ 3,000,000.00 |
| D. Total Contract Sum- | $83,626,000.00 |
| E. Add Total Interest earned------- | $ 9,130,197.29 |
| F. Total payables-------- | $ 92,756,197.29 |
| 1. 12 Units completed up to 31/10/06 | |
| @ $443,000.00 each----- | $5,316,000.00 |
| 2. 29 Units completed up to 30/06/07 | |
| @ $443,000.00 each----- | $12,847,000.00 |
| 3. Lump sum paid to Claimants directly | |
| 01/06/07------- | $ 2,000,000.00 |
| 4. Lump sum paid to Claimants directly | |
| 01/06/07------ | $2,000,000.00 |
| 5. Total payments made------- | $22,163,000.00 |
| 6. Balance Outstanding as of 01/06/07------- | $70,593,197.29 |
On the 22 nd of January 2008, on an application for judgment in default of defence, King J. entered judgment as follows:
‘(a) Judgment for the Claimants in the sum of $25,188,197.29 with interest at 20% per annum from the 1 st July, 2007 until payment.
(b) In respect of the balance claimed, judgment for the Claimants with damages to be assessed.’
It is in relation to this assessment of damages ordered at paragraph (b) above in respect of the balance claimed, that I heard evidence and now render my decision. When the evidence had concluded, there was not sufficient time for closing submissions, and in any event, this matter was so complex, that it necessitated written closing submissions. Those were duly delivered by Counsel. I must apologize to the parties for the delay in delivering this judgment. This was due to pressure of work, and the voluminous and I must confess, confusing, ‘moving-target’ nature of this matter. It has taken me some time to unravel the many issues and copious documentation.
According to the Closing Submissions on behalf of the Ottos, ‘The “balance claimed” is the difference between $25,188,197.29 and $70,593,197.29 as well as damages for breach of contract’. We shall see if at the end of the day, this is really what is being claimed or due to the Ottos.
In this assessment of damages the Ottos rely upon the Witness Statement of Frank Otto filed on the 27 th March, 2009, and the Affidavit of Muriel G. Maitland, filed on the 1 st November 2010. Elegant relies upon the Witness Statement of Garfield Daley, the Managing Director of Elegant, which was filed on the 10 th March 2009. The parties also relied upon a plethora of documents and many of these documents, after some amount of back and forth and contest, were eventually put in evidence by the consent of the parties. This includes the attachments to the Witness Statements of both Mr. Otto and Mr. Daley. Mr. Otto, Mr. Maitland and Mr. Daley all gave viva voce evidence and were extensively cross-examined.
On the 26 th of November 2009, Glen Brown J. made a number of orders in this matter, including an order that Dalma P. James & Associates, Chartered Accountants, review the accounts and other documents related to Wedgewood Gardens Development Phase One and prepare, file and deliver a report setting out:
‘2.(a) The sums received by the Development and/or the Defendant on behalf of the Development.
(b) The sums paid to Jamaica Mortgage Bank.
(c) The sums paid to and/or credited to the Claimants to date.
(d) All sums which are now due and owing to the Claimants (if any) as at the date of the report and if any further sums are now due and payable to the Claimants after the date of the Report, set out that sum or the method of determining what that sum should be.
3. If there are any areas of dispute between the parties the Accountant should identify these areas of dispute and indicate what the position would be if the Claimants' contention is upheld on the one hand and if the Defendant's contention is upheld on the other...
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