Hilary Term
[2019] UKPC 13
Privy Council Appeal
No 2016 of 0071
JUDGMENT
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Maloo
and others (Appellants) v Somar (Respondent) (Trinidad and Tobago)
From the Court of Appeal of the Republic of Trinidad
and Tobago
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before
Lord Kerr
Lord Carnwath
Lord Briggs
Lady Arden
Lord Kitchin
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JUDGMENT GIVEN ON
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25 March 2019
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Heard on 5 March 2019
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Appellants
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Respondent
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Anand Beharrylal QC
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Krishendath Neebar
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Josh Hitchens
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(Instructed by Alvin
Pariagsingh)
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(Instructed by
Haresh Ramnath)
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lord briggs:
1.
The first appellant Deonarine Maloo was in 2007 the owner of a tract of
open land with development potential on Thompson Trace in Chaguanas, Central
Trinidad (“the Property”). He lived in Canada but his father Dularchand Maloo,
the second appellant, lived in Trinidad and Tobago and dealt with the Property
on his behalf. It was orally agreed that the first appellant should sell a
portion of the Property (comprising 8 development lots) to the respondent
Anthony Somar for $500,000, which the respondent duly paid to the second
appellant, who received it on his son’s behalf in December 2008.
2.
On 15th January 2009 the parties reduced that oral agreement
to writing in the form of a memorandum of sale (“the Memorandum”) which
identified the 8 lots with sufficient precision, acknowledged payment and
receipt of the purchase price and contained this warranty:
“The above land has a good
marketable title to the said premises free from all encumbrances and discharge
all outstanding rates, taxes and assessments.”
3.
It was known to both parties, when the agreement for sale was made and
the purchase price paid, that the sub-division of the property by the separate
sale of the 8 lots required planning permission. This is because, by section
8(2) of the Town and Country Planning Act (No 29 of 1960), the expression
“development” is defined as including the sub-division of land. Whether a
sub-division merely by conveyance, rather than by the carrying out of some
visible form of physical division on the ground, constitutes development within
that definition is a matter about which the Board expresses no view of its own.
It was assumed, both by the trial judge Jones J and by the Court of Appeal that
it did.
4.
Planning permission for sub-division of the property had not been
granted when, on 26 February 2010, and without the knowledge of the respondent,
the first appellant transferred the whole of the Property, including the 8
lots, to his sister Sumatie Jhagroosingh, the third appellant, in exchange for
$290,000. The judge found that the third appellant had notice of the agreement
for sale between the first appellant and the respondent at the time of that
transfer.
5.
On finding out about the transfer to the third appellant shortly
thereafter, the respondent issued proceedings against all three of the
appellants for relief which included damages for breach of contract, return of
the purchase price and, in the alternative, the setting aside of the transfer
to the third appellant and an order for specific performance.
6.
The appellants’ case as defendants at the trial in April 2011 included
the putting forward of a version of the Memorandum (and of the oral agreement)
which purported to contain an express term requiring the respondent to obtain
planning permission by 1 August 2009, with provision for the forfeiture of
$250,000 out of the purchase price paid to the vendor if the purchaser failed
to obtain planning permission. The judge found that this version of the
agreement was false, and the copy of the Memorandum produced in support of it
in effect a forgery, that the agreement and Memorandum contained no express
term about planning permission, but that it contained an implied term which
required planning permission for sub-division to be obtained, before
completion, by the first appellant as vendor. The judge found that the sale
agreement had been breached by the first appellant, that the respondent was
entitled to damages, to be assessed, including damages for loss of bargain in
lieu of specific performance which, she concluded, could not be ordered because
of the absence of planning permission for sub-division. She also declared that
the land (by which she meant the 8 lots) was held on trust by the third appellant
for the respondent and made provision for the transfer of the 8 lots by the
third appellant back to the first appellant, upon request by the respondent.
This was, as the judge put it:
“to ensure that the claimant
receive the fruits of his judgment against a defendant who is resident abroad
and if the evidence of the claimant is to be believed, as I do, has boasted of
no assets within the jurisdiction.”
7.
The respondent had, prior to trial, sought to obtain planning permission
for sub-division of the Property but without success. Nonetheless the
respondent did receive a grant of planning permission for the development of
the Property (or part of it) divided into 11 residential lots and one further
lot for public open space, in July 2011. The judge duly assessed the
respondent’s damages at $2,035,400 in April 2012, relying upon expert evidence
tendered on behalf of the respondent which valued the land agreed to be sold
upon the basis that planning permission for its development was by then
available.
8.
An appeal by the appellants was heard and dismissed in February 2016 by
the Court of Appeal. In an extempore judgment Mendonca JA said this:
“We agree with the judge that it
is a term that, in any event, would be implied by law, and we think that the
way the judge dealt with it is correct, in that it is the obligation of the
vendor to show or to pass a good and marketable title, and if the law provides
that land is not to be subdivided unless permission to subdivide is first
obtained, then it seems to us that that goes to the ability to pass a good
marketable title and, in the absence of any contrary agreement, that must be on
the vendor to obtain that permission as part of his obligation to pass a good
and marketable title.”
9.
The main issue raised by the appeal to the Board (for which permission
was granted only in limited terms) was whether the judge and the Court of
Appeal had been right to identify an implied term within the agreement for sale
which placed the burden of obtaining planning permission for sub-division upon
the vendor. Additionally, or alternatively, it was argued that the contract was
never more than conditional upon the obtaining of planning permission so that,
when it was refused, the only entitlement of the respondent was to a return of
the purchase money.
10.
The Board considers that the judge, the Court of Appeal and also the
parties have gone a little astray in focusing their attention upon the presence
or absence of an implied term. On the judge’s findings of fact (which are not
now in dispute) there was no express term about the obtaining of planning
permission for sub-division at all, whether as an obligation of one or other of
the parties, or as a condition for the coming into existence, or the
completion, of the contract. Nor does any term need to be implied. As the Court
of Appeal observed, the first appellant as vendor was under an express
obligation to convey the 8 lots to the defendant, with good marketable title.
If that required planning permission for sub-division to be obtained, then the
vendor needed to obtain it, not as a matter of separate contractual obligation,
but so as to be able to perform his primary obligation under the agreement for
sale.
11.
In the event, the first appellant chose to commit a repudiatory breach
of the contract, not by failing to seek planning permission but by transferring
the 8 lots as part of the Property to his sister. The respondent did not,
initially at least, accept that as a discharge of the contract by repudiation,
because he sought, in the alternative to damages, specific performance of it.
Nonetheless discharge by repudiatory breach was the outcome, once the judge
decided (not challenged on appeal) that specific performance was unavailable
due to the absence of planning permission for sub-division.
12.
The result was that the respondent was entitled to substantial damages,
including damages for loss of bargain, by reason of the first appellant’s
repudiatory breach, rather than entitled merely to the return of the purchase
price, upon the failure of a condition.
13.
Mr Beharrylal QC for the appellants sought valiantly to put in issue
before the Board the judge’s assessment of damages, as described above, upon
the supposed basis that the property agreed to be sold still lacked planning
permission in April 2012, when damages were assessed. But permission to raise
this essentially factual question before the Board was neither sought nor
granted and cannot therefore be entertained.
14.
It follows that this appeal should be dismissed.
