Implementation Ltd v Social Development Commission; Social Development Commission v Implementation Ltd
| Jurisdiction | Jamaica |
| Judge | F Williams JA,Phillips JA,Edwards JA |
| Judgment Date | 20 December 2019 |
| Neutral Citation | JM 2019 CA 114 |
| Date | 20 December 2019 |
| Docket Number | SUPREME COURT CIVIL APPEAL NO 24/2013 |
| Court | Court of Appeal (Jamaica) |
[2019] JMCA Civ 46
IN THE COURT OF APPEAL
THE HON Miss Justice Phillips JA
THE HON Mr Justice F Williams JA
THE HON Miss Justice Edwards JA (AG)
SUPREME COURT CIVIL APPEAL NO 24/2013
SUPREME COURT CIVIL APPEAL NO 32/2013
Ransford Braham QC and Mikhail Jackson instructed by Livingston, Alexander & Levy for Implementation Ltd
Miss Carla Thomas instructed by the Director of State Proceedings for the Social Development Commission
Civil practice and procedure - Pleadings — Raising a case at trial different from that stated in pleadings.
Real Property - Landlord and tenant — Whether there was an agreement for a lease — Intention to be bound by agreement for a lease — Sublease — Effect of breach of covenant in head-lease on the sublease — Frustration of contract.
These appeals stem from a claim filed by Implementation Limited (IL) against the Social Development Commission (SDC) to recover, inter alia, rent and other expenses incurred for premises that it had leased to SDC, comprising 84 acres, located at Stonehole and Cumberland Pen in the parish of Saint Catherine (the premises). In response, SDC filed a counterclaim against IL to recover sums for unjust enrichment from the said premises. On 31 January 2013, Campbell J entered judgment for IL on the claim and counterclaim, with interest and costs to IL to be taxed if not agreed.
Both parties were dissatisfied with certain aspects of this judgment. IL was the first to file its notice and grounds of appeal on 14 March 2013, which was later amended. IL's challenge was essentially:
IL therefore sought orders with interest calculated at the commercial rate on all the sums awarded to it by Campbell J.
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(a) to interest being awarded only with respect to the cost for security to the premises;
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(b) that the learned judge failed to appreciate the commercial nature of the transaction between the parties, and therefore erred in not utilising a commercial rate of interest in making his award;
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(c) that the learned judge erred by failing to rely on the evidence before him of the commercial rate of interest; and
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(d) had failed to give reasons why he had not awarded the commercial rate of interest on the sums awarded by him.
SDC filed its notice and grounds of appeal on 5 April 2013, which was also later amended. It stated that the learned judge had erred:
SDC sought orders that the appeal be allowed; that the judgment of Campbell J be set aside; and that judgment be awarded to SDC; or alternatively, that the appeal be allowed; and the damages awarded to IL be reduced.
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(a) in his treatment and/or interpretation of SDC's pleaded case, and its effect on the case advanced at trial;
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(b) his finding that a fixed term tenancy was in force at the time that SDC vacated the premises in question; and
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(c) in not treating the arrangement between the parties as a monthly tenancy.
At the hearing of these appeals, IL raised a preliminary point that SDC was attempting to argue matters that were not argued in the court below, and findings not appealed against, such as the finding that SDC should not have been permitted at trial to raise a case that had not been set out in its pleaded further amended defence. SDC acknowledged that it had not included a specific ground of appeal challenging the court's finding that SDC's case at trial was different from its pleading, but counsel for IL agreed to withdraw its objection once SDC filed an amended notice of appeal including that specific ground. That was done.
In order to properly analyse the grounds raised in both appeals, a detailed and thorough assessment of the background facts and chronology of events is necessary. The facts are captured from the judgment of Campbell J and a series of correspondence between the parties.
IL is a company registered under the Companies Act 1967 which provides “real estate consulting services and undertakes project and construction management”. SDC was “incorporated pursuant to the Jamaica Social Welfare Commission Act 1958, with powers to purchase, hold and dispose of land, and to sue and be sued” in its own name. It is made up of the chairman and other members appointed by the Minister who are empowered to give directions as to the policy to be followed by SDC in the exercise of its functions.
In or about 1994, IL had entered into a lease with the Commissioner of Lands (COL) in respect of the premises described at paragraph [1] herein. The lease was for a term of 25 years with an option to renew for another 24 years (the head-lease). By letter dated 12 July 1993, the COL gave IL permission to share occupation and possession of the premises with JamWorld Limited (JamWorld). Between 1994 and 1997, IL and JamWorld developed a part of the leased premises into an entertainment complex known as JamWorld Entertainment Centre (JamWorld Centre) in accordance with the terms of the head-lease.
In a letter dated 27 April 1998, SDC wrote to JamWorld and IL expressing its desire to either lease the said premises, or to enter into a joint venture with JamWorld with the objective of:
“i) creating sustainable income generating projects within the sector based on community participation
ii) [developing] vocational training programmes that will strengthen the capacity of the sector to be more professional and productive
iii) contributing to the development of the infrastructure of the industry.”
In response to that letter, IL, in a letter dated 14 May 1998, referred to a meeting held on 13 May 1998 which had been attended by representatives from both IL and SDC. That letter confirmed JamWorld's willingness to enter into a long term lease with SDC in respect of JamWorld Centre, and proposed the following terms and conditions:
“i. Initial lease term of ten years with an option to renew for a further period of five years. We will also grant a right of first refusal to lease the premises on the expiration of the 15 year term if the option to renew after 10 years is exercised.
ii. Lease payment commencing at Ja$140,000.00 per month. Please note that in addition to the payment of Ja$130,000.00 which we discussed at our meeting, we have a lease agreement with the Commissioner of Lands requiring a payment equivalent to Ja$10,000 per month.
iii. The above payment to be fixed for a term of five years conditional upon the amount being fixed at the Ja$ equivalent of US$3,835.62 per month, i.e. Ja$140,000 converted to US$ at a rate of exchange of Ja$36.50.
iv. The lease to commence on July 1, 1998 subject to both parties signing a letter of intent if a final lease document is not available for signing.
v. After five years the lease payment (fixed in US$ but converted at the Ja$ equivalent) to be increased by a formula reflecting one or a combination of the following:
a. An increase of 25%
b. An increase equivalent to the percentage increase in the Consumer Price Index as published by Statin between July 1, 1998 to June 30, 2003
c. The average of two independent market appraisals, one appointed by the SDC and the other by JamWorld Ltd
vi. After ten years the lease payments to be increased similar to the formula at v. above.
vii. If the lease is renewed by the SDC after the 15 year term has expired, the lease payment is to be determined by the average of two independent market appraisals, one appointed by the SDC and the other by JamWorld Ltd.
viii. The SDC to be responsible for all utility payments including electricity, water and telephone.
ix. The [premises] has not been assessed for [premises] taxes but should they become payable the lease payment to be increased by the actual amount of taxes assessed.
x. The SDC to be responsible for the regular maintenance of buildings, plant and equipment and replacement of items lost or destroyed.
xi. The SDC to seek the approval of JamWorld Ltd for capital improvements to the [premises] individually costing in excess of J$500,000. Such approval will not be unreasonably withheld by JamWorld Ltd and a failure by JamWorld Ltd to respond within 14 days to any request by the SDC will constitute automatic approval.
xii. The SDC agreeing to the participation by JamWorld Ltd in the organisation and promotion of the annual Caribbean Heritagefest festival held during the National Heroes Day celebrations.”
IL ended the letter by expressing its hope that the parties would be able to conclude an early agreement in respect of the leasing of the facility.
By letter of 27 August 1998, SDC wrote to IL referring to the letter of 14 May 1998, and the terms and conditions for the lease outlined therein, and confirmed SDC's agreement with: (i) the lease payment of $140,000.00 per month; and (ii) all other terms and conditions except the annual increase and the commencement of the lease. Instead, SDC proposed 1 October 1998 as the commencement date of the lease, and further proposed an annual increase of the lease payment fixed at 20% after five years. The letter ended saying “I trust you will find my counter proposals agreeable and will proceed with the preparation of the necessary documents for signing”.
On 5 September 1998, IL wrote to SDC referring to the letter of 27 August 1998, and in response to IL's proposals contained in the letter dated 14 May 1998. IL indicated that it had accepted the terms and conditions of the proposal set out in the letter of 14 May 1998, other than, the formulae of the increases in lease rental payments, and the commencement date of 1 July 1998. IL then indicated its acceptance of the revised commencement date of 1 October 1998, and proposed a means of computing an increase in the lease rental payment to take account the impact of...
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