Townsend v Persistence Holdings Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Lord Neuberger of Abbotsbury |
| Judgment Date | 05 March 2008 |
| Neutral Citation | [2008] UKPC 15 |
| Docket Number | Appeal No 13 of 2007 |
| Court | Privy Council |
| Date | 05 March 2008 |
[2008] UKPC 15
Privy Council
Present at the hearing:-
Lord Bingham of Cornhill
Lord Scott of Foscote
Lord Rodger of Earlsferry
Baroness Hale of Richmond
Lord Neuberger of Abbotsbury
[Delivered by Lord Neuberger of Abbotsbury]
This is an appeal from the Court of Appeal of the Eastern Caribbean, given on 20 January 2006, against the dismissal of an appeal brought by Mr Thomas Townsend and his wife, Mrs Therese Townsend, from an order of Rawlins J, made in the High Court of the British Virgin Islands on 6 May 2004. Mrs Townsend has died since the matter was before the Court of Appeal, so this appeal has been conducted on behalf of Mr Townsend alone.
The appeal arises out of an agreement between Mr and Mrs Townsend to sell a property ("the property"), situated on Great Camanoe Island in the British Virgin Islands, to the respondent, Persistence Holdings Limited ("Persistence").
On 28 April 2000, Mr and Mrs Townsend entered into two written agreements with Mr Austin Lopez, on behalf of Persistence. The first, headed "Agreement for Sale", provided that the Townsends would sell the property to Persistence for US $500,000, which was recorded as having been paid over in full to the Townsends. Clause 5 required Persistence to "apply to the Governor of the British Virgin Islands for a Non-Belonger's Land Holding Licence to hold the Property". It contained a proviso to the effect that if such a licence ("the licence") had not been granted by 28 April 2001, "either party may by notice in writing to the other or at any time thereafter terminate this Agreement", in which event the $500,000 was to be returned to Persistence.
The second agreement executed on 28 April was headed "Promissory Note" ("the Note"), and in it the Townsends were described as "vendor" and Persistence as "purchaser". In its operative part, the Note provided: "[F]or services rendered and other valuable considerations relating to supervisory control of renovations and additions to the property …. the purchaser agrees to pay to the vendor the sum of $325,000.00 …. upon the…issuance of the … licence".
The licence was not obtained by 28 April 2001 (although it was issued before judgment was given by Rawlins J). Accordingly, at least on the face of it, the proviso to Clause 5 of the Agreement for Sale became operative. Meanwhile, immediately after the execution of the Agreement for Sale and the Note, the Townsends permitted Persistence to carry out alterations for the property, and, towards the end of 2000, they permitted Persistence to enter into possession of the property. On 21 February 2002, purportedly pursuant to their right under the proviso to Clause 5 of the Agreement for Sale, the Townsends gave notice determining that agreement. Persistence retained possession of the property and, accordingly, on 6 June 2002, the Townsends issued proceedings for possession of the property and mesne profits.
In paragraph 2 of their Statement of Claim, the Townsends alleged that the sale agreement in respect of the property was "made partly orally and partly in writing" and was in an agreed sum of $825,000. The contention that there was, in reality, a single transaction involving a sale of the property for $825,000, rather then a sale agreed at $500,000, and a separate, if connected agreement as set out in the Note, was denied in paragraph 2 of Persistence's Defence and Counterclaim. Persistence not only pleaded that the two agreements of 28 April 2000 evidenced the true arrangement between the parties, but also contended that, if what was stated in paragraph 2 of the Statement of Claim was correct, "which is denied", then it amounted to "violation of the Non-Belongers Land Holding Licence Act and accordingly [is] illegal and the claimants are not entitled to claim any relief based or founded on such illegality".
The matter came on for trial before Rawlins J. The parties' respective submissions were set out in very full skeleton arguments, which substantially reflected their respective pleaded cases. At the hearing, Mr Townsend said in evidence that the arrangement between the parties was effected by the two agreements of 28 April 2000 in order to satisfy Mr Lopez's requirements. Mrs Townsend was more specific in her evidence: she said that there was, in reality, a single transaction for the sale of the property at $825,000, and that the reason for the two agreements was to enable Persistence to pay stamp duty based on the assumption that the property was being sold for $500,000. In his evidence on behalf on Persistence, Mr Lopez denied this, and stated that the arrangement between the parties was accurately represented in the Sale Agreement and the Note.
The hearing at first instance lasted over six days between September 2003 and February 2004, and Rawlins J gave judgment on 6 May 2004. Having set out the facts, he turned to consider the first issue which he identified as: "What was the agreed purchase price?" He dealt with that issue in paragraphs 19 to 28 of the judgment, where his conclusions included these findings:
"I do not believe the evidence of the Townsends that the Note was intended to secure an additional sum for the purchase price that was stated in the Agreement. The evidence of Mr Lopez on this aspect of the case, which I believe, and even that of Mr Townsend, is that he (Mr Lopez) was being put into immediate possession of the property on behalf of Persistence. This was for the purpose of effecting the improvement works on the unfinished house…The Townsends carried out some of their obligations under the Note. They provided invaluable advice and directions…
The evidence is that the Townsends endeavoured to carry out the supervisory work particularly in the initial stages of the project….
In addition I believe the evidence that Mr Lopez gave that $500,000 was a reasonable price for the property at the time, given its location, the comparable value of properties in that location and the unfinished state of the property."
In paragraph 24 of his judgment, the Judge stated that he did not
"believe that Mr Lopez caused the Townsends to sign the Note in order to induce them to enter into the Sale Agreement. I believe the evidence of Mr Lopez that the Townsends were quite aware of the terms of the Note and agreed to those terms."
The next issue the Judge went on to consider was: "Is the Note a valid promissory note?" In paragraphs 29 to 34 of his judgment he concluded that it was not a valid promissory note, because the promise to pay was "conditional upon the issuance of the licence by the Government to Persistence", which "was an uncertain event that created a contingency". Paragraph 34 of the judgment ended with the conclusion "illegality is not a live issue that is to be considered in this judgment."
In paragraphs 35 to 62 of his judgment, the Judge considered whether the Townsends had validly determined the Agreement for Sale pursuant to the proviso to Clause 5. In summary, his conclusion was that, while they would otherwise have been within their rights to have determined the Agreement for Sale, the Townsends were estopped from...
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