Easter Term
[2019] UKPC 23
Privy Council Appeal
No 0004 of 2018
JUDGMENT
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Angteeah
(Appellant) v Bathfield and others (Respondents) (Mauritius)
From the Supreme Court of Mauritius
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before
Lord Reed
Lord Lloyd-Jones
Lord Briggs
Lady Arden
Lord Kitchin
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JUDGMENT GIVEN ON
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20 May 2019
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Heard on 9 April 2019
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Appellant
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Respondents (1
and 2)
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Gavin Glover SC
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Siddhartha Hawoldar
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Priyal Bunwaree
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Yanilla Moonshiram
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(Instructed by Carrington
and Associates)
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(Instructed by Axiom
Stone)
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Co-Respondent
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Aidan Casey QC
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(Instructed by Royds
Withy King)
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Respondents:-
(1) Sylvia Bathfield
(2) Michael Bourgeois
Co-Respondent:-
Permanent Secretary of the Ministry of Housing and Lands
LORD BRIGGS:
Introduction
1.
This appeal concerns the effect in Mauritian law upon a written
agreement for the sale of leasehold land of the non-fulfilment of a requirement
in the agreement for the obtaining of permission from the lessor for the
transfer of the leasehold rights from the vendor to the purchaser. The trial
judge thought that the agreement remained enforceable once the vendor exchanged
her lease for a fresh lease which contained no restriction upon assignment. The
Court of Appeal held, to the contrary, that the agreement lapsed because the
requirement for the obtaining of the lessor’s consent was a “condition
suspensive” which had not been satisfied, and that the new lease obtained
by the vendor conferred different rights from those which she had agreed to
transfer to the purchaser.
2.
The outcome of the appeal turns on the application of well-settled
principles of Mauritian law to the particular facts, which the Board will now
summarise.
The Facts
3.
The first respondent Ms Sylvia Bathfield was in 2006 the leasehold owner
of land and a building thereon known as Lot 1, Pas Géométriques, The Vale,
Mauritius (“the Property”), on the terms of a 20 year lease from the government
of Mauritius expiring on 20 December 2013. Article 5A of the lease provided
that the lessee had to seek the express written authorisation of the lessor
prior to assigning her interest under the lease.
4.
By a written agreement, duly notarised and made on 18 April 2006 (“the
Sale Agreement”) Ms Bathfield agreed to sell the Property to the appellant Ms
Mala Devi Angteeah for the sum of Rs 11,500,000. The Sale Agreement was written
in French. The summary of its relevant terms which follows uses an agreed
translation.
5.
Under the heading “PRICE” the purchase price of Rs 11,500,000 was
apportioned as to Rs 5,000,000 for the “rights to the lease” and Rs 6,500,000
for the existing building, and recorded the payment by the purchaser of Rs 100,000
upon the making of the Sale Agreement.
6.
Under the heading “CONDITIONS” the Sale Agreement provided as follows:
“It has been expressly agreed
between the parties as essential conditions to this present deed, without which
they would not have entered into this agreement:
That the Ministry of Housing and
of the Development of Lands gives its authorisation for the transfer of the
above-mentioned rights of lease in the name of the purchaser, and this
following the irrevocable request for transfer made this day to the Ministry
and signed by the parties of which a copy will remain in the possession of each
of them.
In case the said authorisation
would not have been obtained within a delay of 15 MONTHS as from this day, the
purchaser shall, if he so wishes, consider the present undertaking to sell as
being terminated, by notifying the vendor as stipulated below, of his intention
of waiving his obligations and this without there being any indemnity on either
part and without the need for any formality, the vendor shall then reimburse to
the purchaser any sum of money which would have been paid to her on the price
of the present undertaking to sell.
That the transfer of the ownership
of the property and rights subject of the present deed and its finalisation are
subordinate:
1o. To the receipt of the
above-mentioned authorisation from the Ministry of Housing and Development of
Lands;
2o. …”
7.
The parties duly applied to the Ministry for permission for the
assignment of the lease to the appellant. Although the parties’ notary Mr
Leblanc later gave evidence that neither he nor his father (also a notary)
could ever recall such an application for permission being refused, it was, in
fact, never forthcoming in the present case. This was, in summary, because the
government was at that time conducting a review of its leased land, including
the Property, which led to a decision that, rather than permit assignments of
leases such as the lease of the Property, it would, instead, offer leaseholders
an option to take a much longer lease (in this case for 60 years) at a higher
rent and for a premium, on terms which permitted free assignment by the lessee
without the need to seek permission.
8.
Having become aware of this development, the first respondent wrote to
Mr Leblanc on 13 June 2006, in the following terms:
“Following the new budget it
appears obvious that there will be no follow-up of new leases, therefore no
transfer. This would handicap the sale of my bungalow at Pointe aux Cannoniers.
Not having the means to subscribe to the conditions of new leases included in
the budget, the solution that would benefit both parties, the Guillermic and
myself, would be to deduct from the sale price the amount due for the new
lease. This would allow me to settle the new lease and cause its transfer after
the sale or before the sale, which seems not to cause any problem to the new
owners of the bungalow.
Could you please keep me informed
or make any suggestion that would allow to materialize the sale to the
satisfaction of both parties.”
The reference to the Guillermic is to the appellant and her
family. It does not appear that this proposal elicited any written response
from the appellant, if indeed it was communicated to her by the notary.
9.
In about February 2007, no permission having been forthcoming from the
Ministry, both the appellant and the first respondent together visited the
Ministry’s offices to enquire as to the status of their application for
permission to assign. They were told that the matter would be resolved within
three or four weeks.
10.
On 19 May 2007 the Ministry made a written offer to the first respondent
of an option to take a new lease of the Property for a term of 60 years at a
premium of Rs 1,500,000 (“the First Option”), sending a copy to the notary.
11.
By a letter dated 29 May 2007 the notary duly informed the first
respondent of the First Option, and sought to arrange an appointment with her
to “determine the procedure to follow in order to materialise and finalise the
above-mentioned agreement” (English translation). The letter continued (in
translation) as follows:
“During her recent visit in
Mauritius Mrs Guillermic confirmed to me her intention to purchase your
bungalow and also informed me of a new agreement reached between you, by virtue
of which agreement you had accepted a partial payment of the sum of Rs 5,000,000
on the purchase price, in addition to Rs 100,000 already received by you,
against payment of which sum Mrs Guillermic shall have the right of possession
of the bungalow as from the date of payment of the said sum and moreover that
you have undertaken to accept the offer to be made to you by the Government in
order to conclude a new lease (which will thereafter be transferred in the name
of Mrs Guillermic) and to pay the approximate ‘premium’ of Rs 1,500,000 - which
will be claimed by the Government of Mauritius as mentioned in your letter dated
13.06.2006.”
The above quotation comes from the agreed translation of
that letter, but the phrase (in line 4) “you had accepted” might be better
translated as “you would accept” and the phrase “you have undertaken” (in lines
9-10) might better be translated as “you would undertake”. In manuscript at the
top of the letter the notary added (in translation):
“Could you please in return
confirm me by fax whether the contents of the letter are ok for you and reflect
your agreement. Thanks.”
12.
It does not appear what, if any, response the first respondent made to
this letter, but it is clear that the sum of Rs 5,000,000 was not paid, the
appellant was not let into occupation of the Property, and the first respondent
did not exercise the First Option. To the contrary, it appears that, by this
time, the first respondent had sublet the property to the second respondent, Mr
Bourgeois, because the appellant discovered him carrying out works to the
building on the Property. This was the casus belli which led to these
proceedings, which began with the appellant’s application for an interim
injunction, granted on 3 July 2007, restraining the first respondent from
disposing of the Property and the second respondent from carrying out works
thereon. The appellant thereafter commenced formal proceedings in October 2007
seeking a declaration that she was the lawful owner of the Property, permanent
injunctions in the form of the interim relief already obtained, damages, and an
order directing the first respondent to sign a deed of sale, upon payment of
the balance of the purchase price.
13.
In November 2007 the Ministry sent a further option (“the Second
Option”) for a new lease to the first respondent, for acceptance until 22 May
2008, thereby revoking the First Option. After obtaining one or more extensions
of time under the Second Option, in December 2010 the first respondent was
granted a new 60-year lease of the Property by the Ministry, on terms which
permitted assignment without the need to seek permission.
The Law
14.
The law governing the sale and purchase of land in Mauritius is largely
governed by the Mauritian Civil Code, with some amplification from decided
cases in the Mauritian courts. The Mauritian Civil Code is largely based on the
French Civil Code.
15.
The general rule is that a written agreement for the sale and purchase
of land in Mauritius, which sufficiently identifies the land to be sold and the
price, operates as an immediate transfer of ownership. This is reflected in
article 1589 of the Civil Code, which provides (in translation) that:
“An agreement to sell amounts to a
sale when there is consent on the part of both parties as to the subject matter
and the price.”
16.
This general rule is subject to any common intention of the parties to
the contrary, to be gathered from the sale agreement. An example of such a
contrary intention is where the obligation to sell is contracted subject to a
suspensive condition, in French a “condition suspensive”. This is
reflected in article 1181 of the Civil Code which provides (in translation)
that:
“The obligation contracted subject
to a suspensive condition is that which depends on a future and uncertain event
or an event currently taking place but still unknown to the parties.
In the first case, the obligation
cannot be executed until after the event.
In the second case, the obligation
is effective from the day when it has been contracted.”
A condition suspensive is
broadly equivalent to a condition precedent in English law.
17.
A condition suspensive is to be contrasted with a “terme
suspensif”. Article 1185 of the Civil Code provides that a terme differs
from a condition in that it does not suspend the existence of the
obligation, but only delays its performance. An example of a terme suspensif
is where performance is stated to be conditional upon the happening of a future
but certain event, such as the death of a named person.
18.
An agreement for the sale of land which contains a condition
suspensive may or may not contain express provision requiring satisfaction
of the condition within a stated time. Both these alternatives are dealt with
in article 1176 of the Civil Code which provides (in translation) that:
“When an obligation is contracted
subject to an event taking place in a fixed time, this condition is deemed to
have failed when the time has expired without the event having taken place. If
no time has been fixed, the condition can always be fulfilled, and it is deemed
to have failed only when it has become certain that the event will not take
place.”
19.
Read literally, this provision might appear to suggest that a contract
with no time limit for the satisfaction of a condition suspensive could
continue indefinitely, but the parties in their submission to the Board, and
both the courts below, were in agreement that this was not so. The judge
described such an outcome as “preposterous”, and the Board agrees.
20.
A decision of the Cour d’Appel of Montpellier on 23 June 1948 noted in Dalloz
(1948), at note 543, suggests that where a condition suspensive
consists of the obtaining of an authorisation from the authorities, with no
express time limit for its satisfaction, the parties may treat the condition as
having become impossible once a normal and sufficient time to obtain that
authorisation has elapsed without it being obtained. This was a decision which
may be assumed to have been made under broadly equivalent provisions of the
French Civil Code.
21.
In Nouvelle Société du Tamarind Falls v Three Feathers Ltd
(1977) MR 107 the parties made a contract for sale of part of the vendor’s land
in December 1972, the completion of which required a morcellement
consent from government. Treating consent as a formality, the purchaser was
allowed into immediate possession. Consent was formally sought in January 1974.
No consent being forthcoming, in June 1975 the vendor began proceedings to
recover possession of the property, upon the basis that the agreement for sale
had lapsed due to the non-fulfilment of the condition suspensive
constituted by the requirement to obtain morcellement consent. Sometime
after the commencement of proceedings, in June 1976, consent was formally
refused. Applying the Montpellier case (among others) the court held that the
sale agreement had indeed lapsed, not merely in 1976 but prior to the
commencement of proceedings in 1975.
22.
The Board is satisfied, notwithstanding the literal terms of article
1176, that there will readily be implied into a Mauritian contract for the sale
of land subject to a condition suspensive a provision that satisfaction
of the condition will be deemed to be impossible if it has not been satisfied
within a reasonable time, in the absence of any express provision as to time
for the satisfaction of that condition. In particular, the Board rejects the
submission by Mr Gavin Glover SC for the appellant that, in such a situation,
the agreement will not lapse until a party has obtained a declaration from the
court to the effect that a reasonable time has passed without satisfaction of
the condition. This is, in particular, reflected in the court’s conclusion in
the Tamarind Falls case, expressed as follows:
“We accordingly hold that, at the
time it entered the present action, the plaintiff was entitled to treat the
agreement as being at an end as it had become obvious that the ‘condition
suspensive’ (namely obtaining the permit) would not materialise.”
23.
In the Board’s view, to require a party to obtain a declaration before
treating a condition suspensive as incapable of being satisfied after
the elapse of a reasonable time for its satisfaction, would be a recipe for
expensive litigation, in circumstances where the parties are to be treated as
having contracted that their agreement for sale was to lapse in such an event.
Analysis
24.
The first question is whether the requirement in the Sale Agreement to
obtain consent to the assignment of the lease was a condition suspensive
or a terme suspensif. In the Board’s view, it was plainly a condition
rather than a term. The grant of permission by the Ministry was plainly an
uncertain rather than certain future event, however unlikely a refusal may have
been regarded by the notary. Permission was, in fact, never obtained for the
assignment of the then existing 20-year lease. Furthermore, the language of the
Sale Agreement provided in the clearest terms for the subordination of the
transfer of ownership of the Property to the receipt of the permission from the
Ministry.
25.
The second question is whether the Sale Agreement lapsed due to the
non-fulfilment of the condition suspensive, so that the first respondent
was relieved from the obligation to transfer the Property to the appellant and
if so, when. The Sale Agreement contained an express time limit for the
obtaining of permission upon the expiry of which the purchaser could treat the
sale as having lapsed, but no express time limit enabling the vendor to do the
same. It follows from the foregoing analysis of the law that the vendor could
treat the sale as having lapsed if permission to assign was not forthcoming
within a reasonable time. There is no suggestion that the vendor did anything
to impede the grant of permission by the Ministry.
26.
The trial judge appears to have thought that the condition constituted
by the obtaining of the Ministry’s permission to assign remained capable of
fulfilment until it became irrelevant upon the grant of the new 60-year lease,
under the Second Option, as late as December 2010. By contrast the Court of
Appeal concluded that consent to the assignment of the 20 year lease was never
going to be obtained once the government had changed its policy in favour of
offering options for new, longer, leases, which the available evidence
demonstrated had occurred by May 2007 at the latest, when the First Option was
offered to the first respondent.
27.
Mr Glover submitted that this was a factual question upon which the
Court of Appeal should not have departed from the conclusion of the trial
judge. But the trial judge’s analysis was undermined, in the Board’s view, by
two errors of law. First, the judge treated the requirement for the Ministry’s
permission as a terme suspensif rather than as a condition suspensive.
For the reasons already given, this was plainly wrong. Secondly, the trial
judge appears to have thought that the surrender of the 20 year lease in return
for the grant of a new 60 year lease which did not require permission for
assignment was a means whereby the term or condition might either be satisfied
or treated as dispensed with. Again, in the Board’s view, that cannot be right.
This is because, as the Court of Appeal observed, the subject matter of the
Sale Agreement included the assignment of the modest unexpired residue of the
existing 20 year lease (which could not be further assigned without Ministerial
consent) rather than a new 60 year lease, at a different rent and with no
restriction upon assignment. Furthermore, since the vendor needed to pay a
premium of Rs 1,500,000 to obtain the new lease, which the Sale Agreement did
not require her to pay, this reduced by the same amount the price which she was
to obtain from the completion of the sale.
28.
It follows in the Board’s view that the Court of Appeal was entitled to
re-examine the facts upon a correct application of the relevant law, and
entitled to conclude, as it did, that the Sale Agreement lapsed due to the
non-fulfilment of the condition suspensive by the time when these
proceedings were commenced.
29.
The Board has considered whether the Sale Agreement was saved by an
agreed variation which substituted the requirement for the Ministry’s consent
to the assignment of the existing 20 year lease with the obtaining of a new 60
year lease by the exercise of the First (or Second) Option, and its assignment
to the appellant, so as to confer upon her leasehold ownership of the Property,
with the premium being paid to the Ministry out of a further advance of Rs 5,000,000
on account of the purchase price. This is, in substance, what the notary told
the first respondent that the appellant had told him had been agreed between
the parties as a solution to the difficulty in obtaining consent from the
Ministry, in his letter dated 29 May 2007, in the extract quoted above. In the
Board’s view, this solution to the appellant’s difficulties faces insuperable
obstacles.
30.
First, the notary’s letter described what can have been no more than an
oral arrangement, rather than the substantial variation of the Sale Agreement
which would have needed to have been made with due formality. Secondly, if that
variation had been duly made, the first step in its performance would have been
the payment of a further Rs 5,000,000 by the appellant to the first respondent
in part-payment of the purchase price, which never occurred. Nor was the
appellant let into possession. Thirdly, no such variation of the Sale Agreement
was ever pleaded or relied upon by the appellant in the courts below.
Conclusion
31.
It follows from the above analysis that this appeal must be dismissed.
The Board notes in passing that a large number of procedural points were raised
in the appellant’s grounds of appeal and printed case, and traversed at length
in the first respondent’s case. At a late stage the Board was informed that,
sensibly in its view, those matters were not to be pursued at the hearing of
the appeal. Accordingly the Board finds it unnecessary to deal with them, save
to conclude that they would, even if pursued, have been of no avail to the
appellant.
