Keith Tennant v Alex's Import Ltd

• Jurisdiction: Jamaica
• Judge: Panton P,Morrison JA,Phillips JA
• Judgment Date: 30 March 2012
• Court: Court of Appeal (Jamaica)
• Docket Number: SUPREME COURT CIVIL APPEAL NO 43/2006
• Date: 30 March 2012

[2012] JMCA Civ 15

JAMAICA

IN THE COURT OF APPEAL

Before:

The Hon Mr Justice Panton P

The Hon Mr Justice Morrison JA

The Hon Miss Justice Phillips JA

SUPREME COURT CIVIL APPEAL NO 43/2006

Between

Keith Tennant

Appellant

and

Alex's Import Limited

Respondent

Mrs Arlene Harrison and Jermaine Simms instructed by Miss Marlene Uter from Alton E. Morgan & Co, for the appellant

Jalil S. Dabdoub instructed by Dabdoub, Dabdoub & Co for the respondent

CONVEYANCING - Agreement for sale - Damages for breaches under the sale agreement - Order for rectification on the certificate of title - Whether the quantum of damages awarded for breach of sale agreement excessive

Panton P

1 I have read in draft the judgment of my sister Phillips JA. I agree with her reasoning and conclusion and have nothing to add.

Morrison JA

2 I too have read the draft judgment of Phillips JA and agree with her reasoning and conclusion.

Phillips JA

3 This appeal arises from a conveyancing transaction which went very wrong. It required two different actions in court to complete the agreement for sale entered into between the parties and to assess the damages payable for breaches of the same. In this appeal, the appellant vendor, (‘Keith Tennant’) appeals the judgment of Daye J, delivered on 5 May 2006 in favour of the respondent purchaser (Alex's Import Limited) wherein he made the following orders:

• ‘1. Judgment for Claimant on the Claim and Counter-Claim

• 2. Special Damages in the sum of $1,241,363.63

• 3. Interest at 12 percent per annum from the date of service of the Writ to date of Judgment

• 4. General Damages in the sum of $5,000,000.00

• 5. Interest at 12 percent per annum from date of completion of Agreement of Sale to date of Judgment

• 6. Cost to Claimant to be agreed or taxed

• 7. Order that Registrar of Titles rectify the endorsement on Certificate of Title registered at Volume 1065 Folio 81 by inserting the words “Limited” next after the words Alex's Import to read Alex's Import Ltd [sic].’

4 In appealing the judgment of Daye J. he initially challenged the amount of $361,363.63 (being part of the $1,241,363.63, awarded for special damages). Daye J found, inter alia, that Mr Tennant had failed to deliver vacant possession of the premises as agreed and accordingly awarded special damages of $800,000.00, representing the cost of alternative rental from 17 July 1997 to 28 February 1998, and the legal fees for the recovery of possession of the property, in the amount of $50,000.00. He also found that Mr Tennant had failed to produce title for 530 square feet, which was lost to Alex's Imports Limited as a result of an encroachment of the adjoining premises on 72 A Hagley Park Road. He therefore compensated Alex's Imports Limited for the value of the same, being $361,363.63 as at 7 February 1997, with interest at 12% from November 1999 to 5 May 2006. The appeal against that portion of the award for special damages was later abandoned and the only amount in the judgment appealed was the amount ordered in respect of general damages in the amount of $5,000,000.00 with interest at 12% from 17 July 1997 to 5 May 2006.

5 Many issues arose for the consideration of the learned trial judge. However, based on the grounds of appeal filed, it appears to me that the real issue and questions to be decided by this court on this appeal are as set out below.

Issue

Whether the learned trial judge was correct when he awarded the sum of $5,000,000.00 to the respondent as the true and correct measure of general damages for the loss incurred in the circumstances of this case, bearing in mind questions as to whether:-

• (a) the encroachment on the property, reflected on the certificate of title, resulted in the title being useless as a security in the purchase [of the same].

• (b) there was a diminution in the value of the property due to the defect in the title and was sufficient evidence adduced with regard to the reduced value as a result thereof;

• (c) the respondent was entitled to reduced damages having known of the defect in title before the agreement was signed; and were other special circumstances proved and known;

• (d) there was any evidence to support a finding of the rejection of a loan in the amount of $10,000,000.00 from the NCB, and the consequent subsequent removal of $10,000,000.00 from the business;

• (e) there was any evidence prima facie or otherwise to support the loss of $10,000,000.00 or a portion thereof over the period of 2 ¹/₂ years; and

• (f) there was any evidence that the respondent satisfied its duty to mitigate its loss.

The proceedings below

6 It may be helpful to set out the history of the transaction, some details of the real controversy between the parties and the litigation which preceded this appeal.

• (a) Keith Tennant entered into a written agreement for sale with Alex's Imports Limited on 7 February 1997 in respect of property comprised in certificate of title registered at Volume 1065 Folio 81 of the Register Book of Titles, known as 72 A Hagley Park Road, Kingston 10 in the parish of Saint Andrew. It was supposed to contain 22,078 square feet as appeared in the plan annexed to the title for the property. However, prior to the execution of the agreement for sale, the purchaser was aware that there was an encroachment by an adjoining owner resulting in the loss of 530 square feet. The following were some of the terms and conditions of the sale:

  • (i) the sale price was $15,000,000.00;

  • (ii) the purchaser was required to pay a deposit of $1,500,000.00 and an advance payment of $750,000.00 on the signing of the agreement, with the balance of the purchase price to be paid ‘on completion ninety (90) days thereafter’.

  • (iii) completion was on or before the expiration of the 90 days from the payment of the deposit and the advance payment;

  • (iv) possession of the property was to be given vacant on completion;

  • (v) the property was to be free from incumbrances other than the restrictive covenants and easements endorsed on the certificate of title for the property and the easements were to be obvious and apparent;

  • (vi) the agreement was subject to Alex's Imports Limited obtaining a mortgage from a reputable financial institution acceptable to Mr Tennant for an amount not less than $12,750,000.00, with Alex's Imports Limited undertaking to obtain a letter of commitment for the loan, delivered to Mr Tennant's attorneys-at-law on or before 60 days from the date of the agreement;

  • (vii) liquidated damages, being a sum calculated at the rate of 40% per annum on all monies payable under the agreement but not paid at the stipulated time, were payable by Alex's Import Limited;

  • (viii) time was of the essence of the agreement and failure to complete in accordance with the terms and conditions agreed constituted a breach and the deposit would be forfeited without further notice to Alex's Import Limited;

  • (ix) Mr Tennant's Attorneys-at-law, Alton E Morgan & Company, had carriage of sale of the agreement;

  • (x) Charles Sinclair represented Alex's Import Limited.

• (b) The deposit and advance payment were duly paid as required. Alex's Import Limited appears to have indicated that NCB would give an undertaking to pay $10,000,000.00 and accordingly it would pay the balance plus costs on completion. However, contrary to the terms of the executed agreement, Alex's Import Limited took possession of the property on 8 February 1997, prior to completion, with two tenants still in occupation of part of the property, as it needed the premises and could not wait for the completion date in the agreement.

• (c) Several items of correspondence passed between the attorneys at law representing the parties relative to their respective rights in respect of the transaction, commencing on 3 January 1997, prior to the execution of the agreement for sale, and continuing up until the first action was filed in March 1998. I will attempt to summarize the same.

  • (i) On 27 January 1997, Mr Charles Sinclair confirmed to Mr Morgan that he was in receipt of the surveyor's identification report dated 8 September 1987, and that the defect in the boundary of the property disclosed therein remained the same. He requested that, pursuant to the contract of sale, the defect be corrected, prior to completion.

  • (ii) On 30 January 1997, Mr Morgan confirmed that, ‘[t]he provision in the contract that the title shall be free from encumbrances and easements will oblige our client to ensure that the boundary defects are remedied. In view of the fact that they are long outstanding (over 10 years), our client will have the boundaries re-surveyed and the plan attached to the title re-registered. Your client may proceed to execute the Agreement with this understanding’.

  • (iii) On 3 February 1997, Mr Morgan requested payment of the shortfall, in order for Alex's Import Limited to take possession of the property, and enclosed a licence agreement indicating a monthly payment of $84,000.00, which sum was requested.

  • (iv) By letter dated 19 February 1997, Mr Sinclair rejected the request for $84,000.00 and stated that the monthly sum agreed was $60,000.00, as his client had not obtained possession of the entire property, which was required not only for storage of the motor vehicles but for the sale of the same.

  • (v) On 21 February 1997, Mr Morgan advised that, on his instructions, the licence agreement had become redundant, as Alex's Import Limited had taken possession of the property and made extensive alterations to the same to suit their own purposes. As a consequence, his client intended to rely on the fact that Alex's Import Limited was a purchaser in possession, and was therefore obliged to pay interest on outstanding purchase money, (which was then $12,744,000.00,) at the rate of 12% per...