CMK BWI Ltd and 7 others v Attorney General of the Turks and Caicos Islands (on behalf of the Crown and Government of the Turks and Caicos Islands)
| Jurisdiction | UK Non-devolved |
| Judge | Dame Sarah Asplin,Lord Briggs,Lord Kitchin,Lord Leggatt,Lord Burrows |
| Judgment Date | 03 November 2022 |
| Neutral Citation | [2022] UKPC 40 |
| Docket Number | Privy Council Appeal No 0075 of 2021 |
| Court | Privy Council |
[2022] UKPC 40
Lord Briggs
Lord Kitchin
Lord Leggatt
Lord Burrows
Dame Sarah Asplin
Privy Council Appeal No 0075 of 2021
Privy Council
Michaelmas Term
From the Court of Appeal (Turks and Caicos Islands)
Appellant
Ariel Misick KC
Deborah John-Woodruffe
(Instructed by Deborah John-Woodruffe)
Respondent
Helen Mountfield KC
Katy Sheridan
(Instructed by Charles Russell Speechlys LLP (London))
Heard on 11 July 2022
Dame Sarah Asplin ( with whom Lord Briggs, Lord Kitchin, Lord Leggatt and Lord Burrows agree):
This appeal is concerned with whether the Crown Land Ordinance 2012 (the “CLO”) precluded the Turks and Caicos Islands Government (“TCIG”) from granting a lease of certain parcels of Crown land in South Caicos to the Appellants (together referred to as the “Developers”) pursuant to an agreement dated 18 April 2008, made between the Developers and TCIG (the “2008 Agreement”), which was subsequently re-stated in an “Amended and Re-stated Development Agreement” dated 19 August 2013 (the “2013 Agreement”).
Under the 2008 Agreement the Developers agreed to carry out a US $100 million development of South Caicos which included the construction of a hotel, a condominium, a residential development project and a marina development at South Caicos and McCartney Cay. The proposed works included what was defined as “Downtown Restoration”, being the restoration of certain Crown holdings in downtown Cockburn Harbour, South Caicos, and “Island Improvements”, being the improvement of certain areas of Crown land and public areas of South Caicos. The 2008 Agreement provided, amongst other things, that in consideration of the Island Improvements, the Crown would grant a commercial lease of certain parcels of Crown land at a peppercorn rent, in the form contained in a schedule to the 2008 Agreement (the “Downtown Restoration Parcels Lease”) on the delivery of satisfactory proof of the Developer's expenditure of not less than US $2 million on the Island Improvements. It was envisaged that the Island Improvements would be carried out at a maximum total cost of US $4 million which would be shared equally by the Developers and TCIG.
In or around 2010, the Developers claimed that TCIG had breached the 2008 Agreement and TCIG claimed that it had grounds for rescission. By that stage, the Developers had expended US $647,999.99 on the Island Improvements. The dispute included allegations in relation to the sale of land known as the Valhalla Parcel, which is not directly relevant for these purposes. The dispute was settled by a Deed of Settlement dated 19 August 2013. By clause 2 of that deed, the parties agreed to enter into the 2013 Agreement which was executed on the same date.
Under the 2013 Agreement, amongst other things, the Island Improvements ceased to be a mandatory part of the South Caicos development (clauses 1.1.22 and 4.13.1 and 4.13.2) and the provisions in relation to the grant of the Downtown Restoration Parcels Lease were altered. As soon as practicable after the Developers had notified TCIG of their intention to commence the Downtown Restoration or portions of it, TCIG was required to use its best efforts to vacate the Downtown Restoration Parcels and, once that had taken place, the parties were required promptly to finalise and execute the Downtown Restoration Parcels Lease (clauses 4.14.1 and 4.14.2). The terms of the Downtown Restoration Parcels Lease had also been changed and were contained in Schedule 4 to the 2013 Agreement. Notification was given on 20 August 2013, the day after the execution of the 2013 Agreement and TCIG was requested to execute the Downtown Restoration Parcels Lease.
In the meantime, the CLO had come into force on 1 April 2012. It sets out, amongst other things, the powers of TCIG in disposing of Crown land including, by way of lease, for commercial purposes. In January 2015, TCIG gave formal notice that it would not grant the Downtown Restoration Parcels Lease, stating that it was precluded from doing so by section 34 and Part B of Schedule 2 of the CLO which prevented it from entering into any lease unless it was at market rent, having followed the process prescribed by the CLO.
The Developers commenced proceedings in July 2016. They sought various declarations including a declaration that the CLO did not have retrospective effect and that TCIG was in breach of contract by failing to grant the Downtown Restoration Parcels Lease and transferring the Valhalla Parcel. In the alternative, the Developers sought a declaration that, if the CLO did have retrospective effect, it violated their constitutional right against deprivation of property.
In the Supreme Court of the Turks and Caicos Islands, the Chief Justice, the Honourable Mrs Justice Ramsay-Hale, dismissed the Developers' claim with costs. She held that: it was clear that in executing the 2013 Agreement, the parties had intended to extinguish the 2008 Agreement; that the 2013 Agreement fell within the ambit of the CLO; and that, accordingly, TCIG was “unable to perform the contract as agreed” (para 43). In particular, she held that:
(a) ‘… the variation in the terms of the original agreement terms which are set out in the 2013 DA were not temporary or minor but fundamental; a variation going to the root of the contract and imposing a new obligation on TCIG and conferring a new benefit on the Developers” (para 39);
(b) The right which the Developers were seeking to enforce was a new right arising under the 2013 Agreement which did not depend upon any terms of the 2008 Agreement (para 41);
(c) The terms of the 2013 Agreement requiring TCIG to grant the Downtown Restoration Parcels Lease were contrary to the terms of the CLO and unenforceable (para 42); and
(d) The Developers had no accrued right under the 2008 Agreement to the grant of the Downtown Restoration Parcels Lease at a peppercorn rent and therefore, there could be no breach of the Developers' constitutional rights (paras 65 and 66). Under the 2008 Agreement, they had a contractual right to call for the grant of such a lease if they spent US $2 million (para 66) and the rights under the 2013 Agreement were new and “at the time the right arose, the Developers no longer had any right to insist upon the Lease being executed on the original terms and TCIG no longer had the power to grant a Lease on such terms” (para 67).
The Developers appealed to the Court of Appeal of the Turks and Caicos Islands. Despite deciding that the 2008 Agreement was varied by the 2013 Agreement rather than having been rescinded, the Court of Appeal affirmed the judge's decision and dismissed the appeal. In summary, Adderley JA, with whom Stollmeyer JA and Sir Elliott Mottley P (who demitted office before judgment was given) agreed, held that:
(a) The judge was wrong to decide that the variation of the terms concerning the grant of the Downtown Restoration Parcels Lease went to the root of the 2008 Agreement and made it manifest that there was an intention to abrogate that agreement. On the evidence and surrounding circumstances, it could not be said that there had been a fundamental change which indicated rescission of the whole of the 2008 Agreement but that there was a fundamental change to the provisions concerning the grant of the Downtown Restoration Parcels Lease only (para 54);
(b) Applying the correct test, the judge was in error to find that the 2008 Agreement had been rescinded by the 2013 Agreement (para 58);
(c) The only legitimate expectation which could arise from the 2008 Agreement in relation to the Downtown Restoration Parcels Lease was that, if US $2 million was spent on the Island Improvements, the Developers would be granted the lease (para 65);
(d) The judge was right to hold that “because the payment as a precondition of US$2 million had not been made under the 2008 Agreement a legitimate expectation to obtain the Downtown Restoration Lease at a peppercorn rent never vested, and by the time the right was given in the 2013 Agreement without such a precondition the CLO had already come into force thereby making it impossible for him to have a legitimate expectation to obtain such a lease because it was unlawful under the CLO.” (para 66)
(e) Accordingly, no such legitimate expectation arose (para 67).
In the agreed Statement of Facts and Issues, the parties identified the sole issue in the appeal to the Board to be whether the Court of Appeal was wrong to conclude that the expenditure of US $2 million by the Developers was a precondition to TCIG's obligation to execute the Downtown Restoration Parcels Lease. In their written argument, on behalf of the Developers, Mr Misick KC and Miss John-Woodruffe described the questions for the Board as: (i) did the 2008 Agreement impose an immediate binding obligation on TCIG to grant the Downtown Restoration Parcels Lease (albeit the performance of that obligation was not required to take place until the Developers had fulfilled their promise to provide reasonably satisfactory proof of its expenditure of US $2 million); and (ii) was TCIG's obligation to grant the Downtown Restoration Parcels Lease at a rent of US $1.00 affected by the enactment of the CLO?
Much of the written argument on behalf of both the Developers and TCIG, therefore, was centred upon whether: (i) an obligation to grant the Downtown Restoration Parcels Lease under the 2008 Agreement, and clause 4.14.4 of that agreement in particular, was conditional upon US $2 million having been expended by the Developers; or (ii) whether clause 4.14.4 contains promissory conditions creating mutual obligations. In the...
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