The Judicial Committee of the Privy Council Decisions

Sookraj v. Samaroo (Trinidad and Tobago) [2004] UKPC 50 (12 October 2004)

Privy Council Appeal No. 60 of 2002

Jagdeo Sookraj Appellant

v.

Buddhu Samaroo Respondent

FROM

THE COURT OF APPEAL OF TRINIDAD

AND TOBAGO

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JUDGMENT OF THE LORDS OF THE JUDICIAL

COMMITTEE OF THE PRIVY COUNCIL,

Delivered the 12th October 2004

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Present at the hearing:-

Lord Nicholls of Birkenhead

Lord Steyn

Lord Millett

Lord Scott of Foscote

Baroness Hale of Richmond

[Delivered by Lord Scott of Foscote]

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1. This case is about a piece of land in Trinidad at Eastern Main Road, El Dorado, Tacarigua. The registered owner of the land was Mr Deolal Ramute. Each of the two litigants, Mr Sookraj and Mr Samaroo, claims to be the purchaser of the land under a contract of sale with Mr Ramute. The question is which of them is entitled to priority. So far Mr Samaroo has won. Barnes J, in the High Court, found in his favour. The Court of Appeal dismissed Mr Sookraj's appeal. But Mr Sookraj has appealed again. In order to describe the issues raised by this appeal to the Board it is convenient to refer in broadly chronological order to the relevant events.
2. Mr Ramute, the owner of the land, was living in England. He wanted to sell the land. So, on 29 October 1980 he granted a Power of Attorney to Mr Hazrath Mohammed, a resident of Tacarigua. The Power was a general power and, among other things, authorised Mr Mohammed to sell Mr Ramute's land at Eastern Main Road, Tacarigua. The Power of Attorney was registered on 9 January 1981.
3. On 3 November 1980 Mr Ramute signed a Memorandum of Agreement to sell the Eastern Main Road land to Mr Samaroo for $400,000. $50,000 was to be paid as a deposit and the Memorandum of Agreement contained an acknowledgement by Mr Ramute of receipt of that sum. It is accepted, however, that nothing was in fact paid by Mr Samaroo or received by Mr Ramute at that time. The Agreement said that completion of the sale was to take place "on or before" 90 days from the date of the Agreement but went on to say that "Time is not of the essence of this contract".
4. The evidence relating to this Memorandum of Agreement was that the documentation had been prepared in Trinidad by Mr Samaroo with the assistance of the local manager of Colonial Life and sent by Mr Samaroo to Mr Ramute in England. Mr Samaroo said in evidence that he signed the Agreement before sending to Mr Ramute (p.81 of the Record). Mr Ramute sent the document that he, Mr Ramute, signed back to Mr Samaroo in Trinidad. The document bears two signatures. One is that of Mr Ramute. The other is that of a witness to Mr Ramute's signature. The document does not bear Mr Samaroo's signature. There must, therefore, have been two documents sent to Mr Ramute in England; first, a document already signed by Mr Samaroo; second the document later signed by Mr Ramute, duly witnessed, and returned to Mr Samaroo in Trinidad. The document signed by Mr Samaroo was not produced at the trial. The explanation, presumably, was that Mr Ramute had died in 1992 or thereabouts, some four years before the trial which took place in June 1996. There is no evidence as to what, if any, enquiries about this document were directed to Mr Ramute's personal representatives. It is to be noted, however, that when Mr Samaroo gave evidence at the trial his evidence that he had signed the agreement was not challenged in cross-examination. He was asked a number of questions about the document signed by Mr Ramute (see p.92 of the Record) but the premise of all these questions was that this document constituted the contract between Mr Samaroo and Mr Ramute.
5. Mr Ramute sent back the signed Memorandum of Agreement of 3 November 1980 to Mr Samaroo in Trinidad accompanied by a letter to Mr Samaroo of the same date. In this letter Mr Ramute referred to "the copies of the commitment letter" and said he was "signing both copies". These references support the inference that Mr Samaroo had sent two documents, copies of one another, to Mr Ramute. Mr Ramute went on in his letter to say that he was posting a copy of the Agreement to Mr Hazrath Mohammed and said "I have to allow him to collect the down payment". This, no doubt, was a reference to the $50,000 deposit.
6. Barnes J in her judgment of 8 February 2000 said, in terms, that "The agreement dated 3rd November 1980 was a good and valid agreement". This finding was not challenged in the Court of Appeal. Hamel-Smith JA (with whose judgment Warner JA agreed) said that it was "not in issue" that the 3 November agreement was valid (see p.150 of the Record) and Lucky JA said "The authenticity and date of [the 3 November agreement] were not disputed" (p.160 of the Record). Their Lordships have thought it right to refer to these comments because some of the submissions made to the Board have appeared to challenge the existence of the 3 November 1980 agreement. This is a challenge that was made neither at trial nor in the Court of Appeal. It cannot be raised for the first time before the Board. Their Lordships must proceed on the footing that the 3 November 1980 Memorandum of Agreement constitutes a contract that was validly entered into and was binding on both parties upon being made.
7. On 8 January 1981 Mr Hazrath Mohammed, acting under the Power of Attorney, agreed to sell the Eastern Main Road land to Mr Sookraj for the sum of $395,000. Mr Sookraj paid the sum of $3727 on account. A memorandum of the agreement was drawn up and signed by both parties. Mr Mohammed was expressed to sign as "Lawful Attorney of the Vendor Deolal Ramute". The memorandum said that the balance of the purchase price was to be paid by 8 July 1981. Mr Sookraj gave evidence that he later made various other payments on account of the purchase price.
8. It might have been expected that Mr Samaroo would have attempted to pay to Mr Mohammed the $50,000 deposit payable under his contract. As to this there is a conflict of evidence. Mr Samaroo's evidence was that he wanted to pay but Mr Mohammed would not accept the payment. Mr Mohammed's evidence was that Mr Samaroo made no attempt to pay. There are also various other associated factual issues, such as when it was that Mr Mohammed became aware of the existence of the 3 November 1980 contract and when it was that Mr Samaroo had the ability to make the $50,000 payment.
9. In February 1981 Mr Ramute visited Trinidad for a holiday. He met Mr Samaroo and discovered (if he had not already known) that the $50,000 had not yet been paid. What then happened is important. Hamel-Smith JA described what happened in para. 6 of his judgment:

"Ramute requested the deposit from the respondent and, being informed that he had it, took him to his attorney, Mr Sagar, to have it paid over. The respondent had been advised by the lender of the deposit to ensure that he obtained a proper receipt for it. Mr Sagar, on being told this, advised them to sign another agreement on the same terms and conditions, save that the date for completion was extended by ninety days (May 3, 1981). They followed his advice and the deposit was paid over to Ramute."

10. The agreement referred to was dated 23 February 1981. Mr Ramute's English address was followed by the words "and holidaying in Trinidad". Thereapart the contents of this agreement were word for word the same as those of the 3 November 1980 agreement. But, of course, the date for completion formula "Ninety days from the execution of these presents" produced a different date. The $50,000 deposit was paid. So in the 23 February 1981 agreement the acknowledgement of receipt was accurate.
11. Learning that Mr Ramute did not intend to sell the property to him, Mr Sookraj launched proceedings for specific performance against Mr Ramute on or about 27 February 1981. He also lodged a caveat forbidding the registration of any instrument affecting the land. That action has never proceeded to trial. On 19 November 1981 Mr Ramute signed a Memorandum of Transfer of the land to Mr Samaroo in consideration of the payment of the $400,000. Mr Samaroo has not yet been registered as owner of the land. He has, however, remained in possession of the whole property since February 1981. The present action was started by Mr Sookraj in 1988, in an attempt to prevent Mr Samaroo demolishing the building, which had become dangerous after a fire. He failed to obtain an injunction but proceeded with claims for a declaration that he was beneficial owner and for damages for waste.
12. The previous paragraphs have described the story that has led to the litigation over Mr Ramute's Eastern Main Road land. Both Mr Sookraj and Mr Samaroo claim to have entered into valid contracts to purchase the land. Mr Samaroo does not dispute the validity of Mr Sookraj's contract but claims priority on the ground that since his contract is first in time, his equity as contractual purchaser is to be preferred to that of Mr Sookraj.
13. Before the courts below and before the Board it was contended on behalf of Mr Sookraj:

(i) that Mr Samaroo's 3 November 1980 contract lacked consideration, was nudum pactum and therefore unenforceable; and

(ii) that the agreement of 23 February 1981 must be taken to be in substitution for and to have replaced its 3 November 1980 predecessor and that, since Mr Sookraj's 8 January 1981 agreement was earlier in time than the 23 February 1981 agreement, Mr Sookraj's equity under his 8 January 1981 agreement has priority over Mr Samaroo's equity under his 23 February 1981 agreement.

Before the Board additional contentions were relied on:

(iii) it was contended (by Mr Ramdhun) that the facts required the conclusion that the 3 November 1980 agreement was either non-existent or was a sham;

(iv) it was contended (by Dr. Seepersad) that Mr Sookraj had the prior equity because he made payments under his agreement before Mr Samaroo had made any payments under his;

(v) it was contended (also by Dr Seepersad) that Mr Samaroo had repudiated his agreement by failing to pay the $50,000 deposit and that the repudiation had been accepted by Mr Mohammed on behalf of Mr Ramute.

14. As to these various contentions

(i) The proposition that Mr Samaroo gave no consideration for the 3 November 1980 agreement is inconsistent with elementary principles of the law of contract. Under the agreement of 3 November 1980 Mr Ramute agreed to sell, Mr Samaroo agreed to purchase and the price of $400,000 was specified. The proposition that this was a contract without consideration moving from Mr Samaroo is absurd.

(ii) The question whether the 23 February 1981 agreement replaced and discharged the 3 November 1980 agreement or simply effected a variation of the earlier agreement is a genuine question to which their Lordships will return.

(iii) Their Lordships have already referred (in paragraph 6 above) to the contention that the 3 November 1980 agreement was non-existent or a sham. The contention cannot be accepted. It was never put to Mr Samaroo in cross-examination. It is contrary to concurrent findings of fact made in the courts below. And it was never argued in either of the courts below. Bearing in mind that the unexpressed premise of the contention was that Mr Samaroo and Mr Ramute had dishonestly contrived to put forward a fictitious contract in order to deprive Mr Sookraj of the benefit of his 8 January 1981 agreement their Lordships are of the opinion that for the contention to be raised for the first time before the Board was wholly inappropriate.

15. As to (iv), Dr Seepersad's contention that Mr Sookraj had the prior equity because he had made part payments to the vendor under his agreement before Mr Samaroo had made any payments under his agreement is a novel one. No authority was cited in support of it and it is contrary to fairly fundamental principles. A purchaser who enters into a specifically enforceable contract for the sale of land acquires an equitable interest in the land and retains that interest for as long as the contract remains enforceable. On making pre-completion payments on account of the price the purchaser acquires also an equitable lien on the land to secure their repayment (subject to any set-offs and the possible forfeiture of the deposit) if the contract goes off. Mr Samaroo's equitable interest in the present case arose on 3 November 1980, the date of the agreement. Mr Sookraj acquired an equitable interest on 8 January 1981, the date of his agreement, and further equitable interests when he made payments on account of the purchase price payable under his agreement. But Mr Samaroo's equitable interest, being earlier in time, has priority over all these equitable interests of Mr Sookraj. So their Lordships reject Dr Seepersad's proposition.
16. As to (v), Dr Seepersad contended that Mr Samaroo's failure to pay the $50,000 deposit on, or soon after, the signing of the 3 November 1980 agreement constituted a repudiatory breach of contract that entitled Mr Ramute, or his agent Mr Mohammed, to accept the repudiation and thereby put an end to the 3 November 1980 agreement. The actual facts regarding the non-payment of the $50,000 are not entirely clear but the findings of the trial judge, Barnes J, are inconsistent with the non-payment constituting a repudiation. After referring to Mr Ramute's request in his letter of 3 November 1980 that Mr Samaroo pay the $50,000 to Mr Hazrath Mohammed, the judge said this (p.119 of the Record):

"Mr Mohammed was however reluctant to accept the down payment from [Mr Samaroo] and this reluctance continued for some weeks. [Mr Samaroo] complained (by telephone) to Mr Ramute who reassured him that he would be coming to Trinidad shortly and that the situation would be remedied. The vendor came to Trinidad in February 1981. He informed [Mr Samaroo] that matters had been settled with Hazrath Mohammed and that the down payment could now be paid."

In the Court of Appeal Hamel-Smith JA, while expressing some misgivings about the judge's finding that Mr Mohammed had been reluctant to accept the $50,000, made no other criticism of her findings. Nor did Lucky JA. In their Lordships' opinion the contention that Mr Samaroo's failure to pay the $50,000 deposit constituted a repudiatory breach of contract must be rejected.

17. In any event, a repudiation does not itself determine the contract. It gives a right to the innocent party, by accepting the repudiation, to determine the contract. If the innocent party does not accept the repudiation, the contract remains in existence for the benefit of both parties. The acceptance of a repudiation requires no particular form. But it must be unequivocal and it must be communicated to the party in breach. (see Chitty on Contracts 29th Ed. Vol 1 para 24-013). These are all basic and well known principles. Dr Seepersad accepted that Mr Ramute himself had never accepted the repudiation but, he submitted, Mr Mohammed, Mr Ramute's agent under the Power of Attorney, had done so. He had done so, he said, in three ways. First, he had registered his Power of Attorney on 9 January 1981; second, he had entered into an agreement to sell the land to Mr Sookraj; third, he had accepted part payment of the purchase price from Mr Sookraj. All of this, submitted Dr Seepersad, showed that Mr Mohammed was accepting Mr Samaroo's repudiation and treating the 3 November 1980 agreement as at an end.
18. The registration of the Power of Attorney was wholly neutral but their Lordships can accept that Mr Mohammed's dealings with Mr Sookraj were inconsistent with the 3 November 1980 agreement continuing in force. But when and how was the alleged acceptance of Mr Samaroo's alleged repudiation communicated to Mr Samaroo? There is no evidence of any such communication. The best Dr Seepersad could do was to say that the registration of the Power of Attorney was a communication to the whole world. Perhaps it was, but it was not a communication of the acceptance of a repudiation. And, leaving aside the earlier telephone call (see para 16 above), as soon as Mr Ramute arrived in Trinidad in February 1981, his dealings with Mr Samaroo made it very clear that he regarded the 3 November 1980 agreement as still in force. In their Lordships' opinion, Dr Seepersad's reliance on an acceptance by Mr Mohammed of a repudiation by Mr Samaroo of the 3 November 1980 agreement is hopeless.
19. Their Lordships must now return to the only real issue in the case. Did the 23 February 1981 agreement rescind and replace the 3 November 1980 agreement so as to give priority to Mr Sookraj's equitable interest under his 8 January 1981 agreement? The general principle is expressed in Chitty on Contracts 29th Ed. Vol 1 at para. 22-028:

"A rescission of the contract will also be implied where the parties have effected such an alteration of its terms as to substitute a new contract in its place … it is necessary to distinguish a rescission of the contract from a variation which merely qualifies the existing rights and obligations. If a rescission is effected the contract is extinguished; if only a variation it continues to exist in an altered form. The decision on this point will depend on the intention of the parties to be gathered from an examination of the terms of the subsequent agreement and from all the surrounding circumstances."

20. In the well-known leading case, Morris v Baron & Co [1918] AC 1, Lord Dunedin said, at page 26, that

"The criterion is in the question whether what is intended to be effected by the second contract is rescission or variation."

And Lord Parmoor, at page 36, said that the determining factor on which the appeal depended was the intention of the parties at the time when the second agreement was made. In British and Benningtons Ltd v North Western Cachar Tea Co Ltd [1923] AC 48. Lord Sumner said this (page 68)

"It was, however, argued before your Lordships that … the old contracts were discharged because a varied contract is not the old contract, and as you cannot have a new and varied contract and an old and unvaried contract, regulating the same thing at the same time, the old contract, like other old things, must be disregarded. As a matter of formal logic, this may possibly be so, but such was not the view taken by this House in Morris v Baron, since, if their Lordships had thought that any variation whatever would make a new contract and discharge the old one, they would have said so expressly … The variation may be a new contract, so as to make writing, duly signed, indispensible to its admissibility, for this is a matter of form and of the words of the statute, but the discharge of the old contract must depend on intention, tested in the manner settled in Morris v Baron."

This passage from Lord Sumner's speech was referred to by Lord Devlin in giving the judgment of the Privy Council in United Dominions Corporation (Jamaica) Ltd v Shoucair [1969] 1 AC 340. Lord Devlin summarised the legal principle thus, at p.348:

"If the new agreement reveals an intention to rescind the old, the old goes; and if it does not, the old remains in force and unamended."

21. The question whether in signing the 23 February 1981 agreement Mr Ramute and Mr Samaroo intended to discharge the 3 November 1980 agreement is a question of fact to be decided by inference from the surrounding circumstances and the contents of the two agreements. Barnes J's finding on this issue is to be found at page 121 of the Record

"Ramute's concern that [Mr Samaroo] be given 'a proper receipt prepared by a lawyer' might have prompted Mr Sagar to prepare the receipt for the down-payment in the form of an agreement for sale but it in no way detracts from the efficacy or merits of the earlier agreement of 3 November 1980."

This is not quite an explicit finding on the question of the parties' intention but is tantamount to one. In the Court of Appeal, however, Hamel-Smith JA and Lucky JA did make explicit findings. Hamel-Smith JA said (p.153 of the Record)

"On the evidence it is indisputable that there was never any intention on the part of Ramute and [Mr Samaroo] to rescind the first agreement; rather there was every intention to keep it on foot."

Lucky JA said he agreed "with the judge's finding of fact that the parties had no intention to rescind the agreement of 3 November 1980" (p. 164 of the Record) and explained why (page 167 of the Record):

"The only variation effected by the second agreement is a new date of completion to which there was mutual agreement. This change did not go to the root of the first agreement. The evidence discloses that the second agreement was not inconsistent with the first agreement and that its true purpose was to satisfy a request from the Insurance Company (the lender) that the respondent should be in possession of a receipt for monies paid on deposit …"

22. Their Lordships can find no fault in the legal principles applied by the Court of Appeal to resolve this issue, and none was suggested by Dr Seepersad. There are concurrent findings of fact by the courts below that Mr Ramute and Mr Samaroo did not intend the 23 February 1981 agreement to discharge the earlier 3 November 1980 agreement. These findings are well supported by the evidence in the case and their Lordships are in respectful agreement with them.
23. Accordingly, this appeal must be dismissed with costs.