Oceania Heights Ltd v Willard Clarke Enterprises Ltd & others
| Jurisdiction | UK Non-devolved |
| Judge | Lord Neuberger |
| Judgment Date | 30 January 2013 |
| Neutral Citation | [2013] UKPC 3 |
| Date | 30 January 2013 |
| Docket Number | Appeal No 0049 of 2011 |
| Court | Privy Council |
[2013] UKPC 3
Lord Neuberger
Lord Mance
Lord Wilson
Lord Reed
Lord Carnwath
Appeal No 0049 of 2011
Privy Council
Appellant
Fred Smith
Ruth Jordan
Roderick Dawson Malone
(Instructed by Simons Muirhead & Burton)
Respondent
Harvey Tynes QC
Charles Mackay
Joseph Moxey
Elliot Lockhart
(Instructed by Stephenson Harwood LLP)
Heard on 15 November 2012
Until 2000, Willard Clarke Enterprises Limited ("WCE") was the owner of a parcel of land ("the land") on Great Exuma, Bahamas, consisting of some 40 acres, which, in 1970, was subdivided into 121 lots. On 2 March 1970, the Permanent Secretary at the Ministry of Works wrote to Mr Willard Clarke, on behalf of WCE, stating that "subject to the payment of fees…the Minister of Works is prepared…to approve of the layout of the subdivision" ("the 1970 letter").
This approval was given under the terms of section 3 of the Private Roads and Sub-Divisions (Out Islands) Act, Chapter 257. Section 3 precluded any person "without the approval of the Minister, [from] lay[ing] out any new road or any new sub-division". It went on to provide that anyone seeking such approval should provide appropriate specifications to the Minister. Section 4 provided that "[n]o person shall, without the approval of the Minister, construct any new road in any new sub-division", and it then went on to set out certain provisions with regard to the quality of any road approved by the Minister.
The 1970 letter also specifically referred to section 5 of Chapter 257. Section 5 provided that "[n]o owner shall…convey [or] agree to convey…any land in a new subdivision unless the approval of the Minister has been given under section 4 of this Act and either" an appropriate bond is furnished to the Minister or roads have been constructed "to the satisfaction of the Minister" and in accordance with "specifications approved by the Minister". Section 7 precluded any person from conveying or agreeing to convey any lot in a new subdivision, unless it was shown on a survey plan which had been approved by the Minister. Section 9 provided that, by breaching section 5 or 7, a person committed a criminal offence, and would be liable to a fine not exceeding $4,000 or $200 respectively. The 1970 letter "remind[ed]" Mr Clarke "of the need to comply" with sections 5 and 7.
Following the 1970 letter, WCE, through a Mr Marshall, agreed to sell eleven of the 121 lots ("the eleven lots") pursuant to six different contracts or similar arrangements (the details of which are unimportant for present purposes). On 25 September 1995, WCE agreed to sell to Oceania Heights Limited ("Oceania"), the whole of the land, excluding the eleven lots. Oceania subsequently conducted title searches and, on failing to discover any evidence of recorded agreements to sell, or conveyances of, the eleven lots, made further enquiries. On 19 December 1995, the Ministry of Works wrote to Oceania, confirming that approval for the sale of the eleven lots had not been given by the Minister.
In the light of this information, negotiations took place between WCE and Oceania, which led to the conclusion on 5 January 1996 of two further agreements. Under the first of these agreements, which was backdated to 25 September 1995, WCE agreed to sell the entirety of the land (i.e. including the eleven lots) to Oceania. This agreement (the "1996 Agreement") was stamped with a certificate dated 9 February 1996, signed on behalf of the Registrar General, stating that the 1996 Agreement had been "recorded in book 6609 pages 139 to 147 in accordance with the provisions of the Registration of Records Act, Chapter 193".
Under the second of these agreements, Oceania and WCE agreed an indemnity in relation to the eleven lots ("the indemnity agreement"). The indemnity agreement recited the fact that, on behalf of WCE, Mr Marshall had negotiated contracts to sell the eleven lots to various "intended purchasers", who had "paid various deposits" to Mr Marshall. The indemnity agreement went on to record that, if an intending purchaser brought proceedings in respect of the contract he or she had entered into and "provid[ed] proof of payment" of the deposit, "Oceania undertakes to be fully responsible for satisfying any such claim in cash", and that Oceania would also
"be fully responsible for meeting all legal and other costs, liabilities and expenses incurred by [Mr] Marshall as a result thereof…, and if he is deemed to be liable in any manner to the intended purchaser then Oceania will pay any such liability or sum ordered or found due and payable".
In 1998, there were various exchanges between Oceania and WCE. These reveal a common understanding between the parties, or at least between their lawyers, in relation to two issues. (i) That the agreements to sell the eleven lots could not be executed until approval of the Minister had been granted. (ii) That the recording of the 1996 Agreement meant that WCE was not in a position to convey the eleven lots to the intending purchasers (or their successors).
On 29 February 2000, WCE conveyed to Oceania all the land excepting the eleven lots. Oceania accepted it without prejudice to any other rights. At some point, Oceania started to construct roadways and other items of infrastructure on the land. Meanwhile, on various dates between February 2000 and February 2001, WCE executed conveyances ("the Conveyances") in respect of the eleven lots to the intending purchasers (or their successors). On 1 November 2005, the Ministry wrote to Oceania to grant approval under section 4 of Chapter 257 for the sale of the sub-divided lots on the land.
On 17 May 2000, Oceania began the current proceedings against WCE, to which the purchasers under the Conveyances ("the purchasers" and together with WCE "the respondents") were later joined, seeking an order for specific performance of the 1996 Agreement in so far as it had not been performed (i.e. for a conveyance, or conveyances, of the eleven lots) and damages. Oceania also sought a declaration that the Conveyances to the purchasers of the eleven lots were void and of no effect.
The action was heard by Lyons SJ. On 29 August 2008, he handed down judgment in which he concluded that Oceania was entitled to a conveyance of the eleven lots from WCE, on the ground that the Conveyances of the eleven lots and the contracts between WCE and the purchasers (or their predecessors) were "void ab initio".
Lyons SJ reached this conclusion on the ground that the Conveyances to the purchasers (and the antecedent contracts) were void and ineffective by virtue of section 5 of Chapter 257. As the Conveyances to the purchasers, and the antecedent contracts, were executed in breach of section 5 (and, whilst not identified expressly by Lyons SJ, in breach of section 7) of Chapter 257, the Judge concluded that they were void, and that Oceania was entitled to have the eleven plots conveyed to it by WCE.
The respondents appealed that decision to the Court of Appeal. In a judgment given on 27 July 2010, the Court of Appeal (Blackman, Newman and John JJA) allowed the appeal, on the ground that the judge was wrong to conclude that the effect of Chapter 257 was to render the Conveyances (and the contracts pursuant to which those Conveyances were made) void. While the Conveyances and antecedent contracts were executed by WCE in breach of sections 5 and 7 of Chapter 257, and rendered WCE liable to prosecution and fines, the Court of Appeal held that those statutory provisions did not invalidate the Conveyances, which were therefore effective as against Oceania.
Oceania now appeals to the Board. Although various other points were included in the written cases, only two substantive issues have been argued before the Board, both raised by Oceania on its appeal. The first issue arises from Oceania's contention that the Court of Appeal was wrong to reverse the Judge's conclusion that the Conveyances were void: that point involves deciding whether the effect of sections 5 and 7 of Chapter 257 was to render void any conveyance executed in circumstances precluded by those sections.
The second issue arises from Oceania's contention that, even if the Court of Appeal was right in concluding that the Conveyances were otherwise effective, Oceania is nonetheless entitled to have the eleven lots conveyed to it. That argument is based on the fact that the 1996 Agreement had been recorded on 9 February 1996 as registered by the Registrar General. The effect of that registration, runs Oceania's argument, is that, pursuant to section 10 of the Registration of Records Act, Chapter 187, its right under the 1996 Agreement to have the whole of the land (including the eleven lots) conveyed to it took priority over the rights of the purchasers under their respective earlier contracts and the subsequent Conveyances. Apart from raising a conveyancing point of some significance, this issue also raises a procedural problem.
So far as the effect of sections 5 and 7 of Chapter 257 is concerned, the Board is satisfied that the view taken by the Court of Appeal was correct, and the conclusion reached by Lyons SJ was wrong. There is no doubt that, as at the time they were executed, the Conveyances constituted a breach of sections 5 and 7 by WCE. WCE was precluded from "convey(ing)" any of the eleven lots under those sections, because the conditions set out therein had not been satisfied. Each of the Conveyances would appear to have rendered WCE liable for a fine "on summary conviction" under section 9 of Chapter 257. So, too, the...
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