The Attorney General v River Dorée Holdings Ltd (Saint Lucia)
| Jurisdiction | UK Non-devolved |
| Judge | Sir Bernard Rix |
| Judgment Date | 11 December 2017 |
| Neutral Citation | [2017] UKPC 39 |
| Court | Privy Council |
| Docket Number | Appeal No 0032 of 2015,Privy Council Appeal No 0032 of 2015 |
| Date | 11 December 2017 |
Privy Council
Michaelmas Term
[2017] UKPC 39
Lord Mance
Lord Reed
Lord Carnwath
Lord Hodge
Sir Bernard Rix
Privy Council Appeal No 0032 of 2015
Appellant
James Guthrie QC (Instructed by Charles Russell Speechlys LLP)
Respondent
Nicholas Dowding QC Stanley Marcus SC (Instructed by Eversheds Sutherland (International) LLP)
Contract Law - Construction — Interpretation — Privy Council — Appeal — Whether Court of Appeal erred in holding that specific clause in lease agreement was unambiguous — Whether Court of Appeal erred in not relying on recital to assist in construction — Appeal dismissed — Articles 945 and 1141 of Civil Code.
This appeal raises a central issue of construction arising out of a lease of agricultural land granted, in the name of Her Majesty Queen Elizabeth the Second, by the Government of St Lucia, represented here by its Attorney General, the appellant, to River Dorée Holdings Limited, the respondent. The lease, which was dated 20 February 1987, was for an initial period of 50 years commencing on 24 October 1986, and contained an option to purchase. The issue of construction arises out of a mismatch between a recital (recital E) and the dispositive part of the lease providing for the option to purchase (clause 9(9)). The Board will refer to the “Government”, “River Dorée”, the “Lease” and the “land”.
Recital E stated that “at the end of the first ten (10) year period of this Lease” the Lessee (River Dorée) would be permitted by the Government to purchase the property “provided THE LESSEE has satisfactorily carried out the terms and conditions of this Lease including the Development Program”. Whereas clause 9(9) provided that the option to purchase could be exercised by notice given “[a]t any time after the end of the tenth year of the term” without reference to any condition requiring that River Dorée had satisfactorily carried out the terms and conditions of the Lease including the Development Program.
The Development Program was a programme imposed on River Dorée, elaborated in detail in the Lease's Schedule 6, designed to improve, indeed to “transform”, the leased land into a modern highly productive farm area for the production of food both for domestic consumption and for export, utilising and promoting modern scientific agricultural methods.
When River Dorée sought to exercise its clause 9(9) option by notice dated 10 January 1997, the Government gave no substantive reply until 21 June 1999, at which time the Permanent Secretary at the Ministry of Agriculture invited comments from River Dorée on an Interim Report, commissioned by the Government, which had concluded that the Lease's Development Program had not been satisfactorily carried out. That was also the conclusion of the Final Report. This led to the current dispute, wherein River Dorée insisted on its right to purchase the land, in reliance on clause 9(9) of the Lease, and the Government, relying on recital E, refused to acknowledge any such right, on the ground that the Development Program had not been satisfactorily carried out.
In due course this litigation was commenced by River Dorée on 2 August 2005, claiming a declaration that the exercise of its option on 10 January 1997 entitled it to a transfer and a deed of sale in respect of the land. The Government disputed this, relying on what it alleged was River Dorée's failure to comply with the Development Program.
In the meantime it had sought to determine the Lease by a letter dated 16 June 2003 and compulsorily to acquire the land.
By a notice of application dated 24 January 2006, the Government sought a preliminary issue on the interpretation of clause 9(9) in the following terms:
“Whether Clause 9(9) of the Lease Agreement between the Majesty Queen Elizabeth the Second, and River Doree Holdings Limited speaks to an automatic transfer of title of the property subject to the Lease on the effluxion of ten years; or whether it is conditional on the satisfactory performance of the terms of the lease.”
On 27 October 2006 Master Cottle gave judgment on that preliminary issue in favour of the Government's contention, overruling River Dorée's submission that a preliminary issue should not be debated. He considered that the issue might lead to the end of the litigation; and that it was a short point which required no evidence. In a brief judgment, he concluded (at para 10) that reading recital E and clause 9(9) together made it clear that –
“… the option to purchase is conditioned upon the Lessee having satisfactorily carried out the terms and conditions of the lease including the development program.”
Master Cottle gave two reasons in support of his decision. The first was that recital E's importance was emphasised by the fact that it was there that the parties had provided for payment of the lease rent. In that he was mistaken. The second was that clause 9(9) was subject to clause 9(11) which provided that upon the option being exercised the Government was to grant River Dorée a licence which was to provide for the forfeiture of the land if the Development Program was not carried out as far as practical. On this appeal to the Board, Mr James Guthrie QC who appeared on behalf of the Government said that he did not rely on either of these reasons.
There was no formal appeal from that ruling at that stage, but Master Cottle's anticipation that his decision would put an end to the litigation was not fulfilled. The case went forward to a trial in which inter alia the issue of interpretation was re-argued, with the consent of both parties, this time with the Government relying on evidence of certain matters occurring prior to the making of the Lease as an aid to its construction. The Board will refer to those matters below. One of them was referred to by Georges J in his judgment (at paras 49–50), but was not subsequently relied on by him for the purposes of his conclusion on the issue of construction.
In a lengthy judgment, dated 30 July 2012 (nearly three years after trial), devoted in the main to the issue of whether River Dorée had failed to comply satisfactorily with the Development Program, Georges J upheld Master Cottle's interpretation of the relationship between recital E and clause 9(9). His reasoning exactly echoed and supported that of Master Cottle (at paras 10–12 and 306–307 of his judgment). For the rest, Georges J concluded, to summarise the matter briefly, that River Dorée had not complied satisfactorily with the Development Program; that although there had been “remarkable development progress” between 1987 and 1993 “which had been achieved within that era starting as it were in a sense virtually from scratch” (at para 117); and although there had been “critical benefits achieved by the claimant for agricultural diversification in St Lucia as well as the introduction of annual crops such as vegetables, hot peppers, melons etc together with the application of drip irrigation and other appropriate technologies” (at para 373); nevertheless River Dorée had not satisfactorily fulfilled “the terms and conditions of the Deed of Lease including specifically its obligations in respect of the Development Program as per clause 9(9) of the Lease”, and the Government, although it generally knew of these failures, had not acquiesced in them (para 383). The reference above to “as per Clause 9(9)” (at para 383(i)) is puzzling since clause 9(9) does not refer to the Development Program, but it suggests that, on the judge's interpretation, following Master Cottle, clause 9(9) was read as somehow incorporating recital E.
On appeal to the Court of Appeal of the Eastern Caribbean Supreme Court, the judgment of Georges J on the issue of interpretation was reversed and set aside. In a judgment given by Justice of Appeal [Ag] John Carrington QC, concurred in by Dame Janice M Pereira DBE, Chief Justice, and Justice of Appeal Davidson K Baptiste and handed down on 25 November 2013, it was held that clause 9(9) was unambiguous and complete in its own terms, so that there was no need to have recourse to recital E to assist in its construction (at para 46). Indeed, its terms were in conflict with recital E (at para 44). The judgment cited Mackenzie v The Duke of Devonshire [1896] AC 400, 408 for the proposition that it was “settled principle that the operative words of a deed which are expressed in clear and unambiguous language are not to be controlled, cut down, or qualified by a recital or narrative of intention” (at para 45). The Government was therefore in breach of its obligations under the lease by failing to commence the process leading to the execution of the Deed of Sale and grant of the Aliens Landholding Licence required by the Lease upon receiving notice of the exercise of the option in January 1997. Since, however, River Dorée had not satisfactorily quantified the extent of its financial loss, it was entitled to only nominal damages in the amount of EC$50,000 (at para 98). It therefore concluded that River Dorée was entitled to the following relief (at para 99):
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“a. A declaration that the appellant on the 10th day of January 1997 became legally entitled to the transfer and a Deed of Sale of and in respect of the freehold interest of and in such of the lands described in the First Schedule to the Deed of Lease dated 20 February 1987 …
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b. A declaration that the appellant on the 10th day of January 1997 became legally entitled to the grant of an Alien's Landholding Licence by the Government of Saint Lucia for the purpose of holding the freehold interest in the said lands.
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c. A declaration that on the 10th day of January 1997 the Government of Saint Lucia became trustee on behalf of the appellant in respect of the said lands …
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d. Damages in the sum...
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