Carmel v Satya [1997] SBHC 70; HC-CC 179 of 1996 (12 August 1997)

HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 179 of 1996

ANTHONY CARMEL

-V-

NARAYAN SATYA

High Court of Solomon Islands
(Palmer J.)

Hearing: 29th July, 1997
Judgment: 12th August, 1997

A. Nori for the Plaintiff
A. Radclyffe for the Defendant

PALMER J.: The Plaintiff claims that he has a legally binding contract for the sale and purchase of the fixed-term estate in Parcel No. 191-029-114, containing the residential home of the Defendant located at West Kola Ridge, Honiara ("the Property"). He claims that an offer was made on or about 16th September, 1995 and concluded on or about 15th November, 1995. The existence of such a contract and the fact that he was willing to perform his part of the contract pursuant to paragraph 107(2)(ii) of the Land and Titles Act entitled him to the remedy inter alia, of specific performance so that title to the said property should be transferred to him. He does not dispute that he does not have title to the said property. What he contends is that he has a valid contract for sale and purchase and which has been part performed.

The Defendant on the other hand claims simply that no valid contract for sale and purchase existed, and that thereby, the Plaintiff is not entitled to the relief claimed in his Statement of Claim.

The property which is the subject of the dispute is registered land and comes under the provisions of the Land and Titles Act (Cap. 93). Of relevance is section 107(1) and (2). Those provisions read as follows:

"(1) No registered interest in land shall be capable of being created or disposed of except in accordance with this Act and every attempt to create or dispose of such interest otherwise than in accordance with this Act shall be ineffectual to create, extinguish, transfer, vary or affect any such interest.

(2) Nothing in this section shall be construed as preventing any unregistered instrument from operating as a contract, but no action may be brought upon any contract for the disposition of any interest unless the agreement upon which such action is brought, or some memorandum or note thereof, is in writing, and is signed by the party to be charged or by some other person thereunto by him lawfully authorised:

Provided that such an action shall not be prevented by reason only of the absence of writing, where an intending purchaser or lessee who has performed or is willing to perform his part of a contract-

(i) has in part performance of the contract taken possession of the property or any part thereof; or

(ii) being already in possession, continues in possession in part performance of the contract and has done some other act in furtherance of the contract."

The relevant part which the Plaintiff seeks to rely on is paragraph (ii) of the Proviso. He argues that a verbal contract had been concluded between the parties on or about 15th November, 1995 and that it had been part performed by the Plaintiff by continuing in possession and doing some act in furtherance of the contract.

The first contentious issue for determination therefore is whether there is an unwritten contract in existence. If no contract exists, then that is the end of the claim of the Defendant. If a contract should be found to be in existence, then this Court can go on to consider whether the Plaintiff has continued in possession in part performance of the contract and has done some other act in furtherance of the contract.

The evidence adduced in support by the Plaintiff in essence is as follows. That on or about 16th September, 1995, the Defendant offered to sell the West Kola Ridge property to the Plaintiff. According to the evidence of the Plaintiff it had been the intention of the Defendant all along to sell the house to him. Since moving into the house in October of 1992, he had had numerous conversations with the Defendant, who was at the said time residing in Canada, that he wanted to sell the house to him. The Plaintiff stated in evidence that the Defendant had indicated many times over, that he would return to the country to sort out the sale of his house to the Plaintiff, but never did. In or about June of 1994 therefore, whilst on holiday, on his way to India, he personally called in to see the Defendant at Vancouver, Canada. He stated that the Defendant repeated his intention to sell the house to him, (this was denied by the Defendant) and indicated that he would return to the country in about two months time to finalise matters. The Defendant did not return until September of 1995. Shortly after his arrival, the Defendant advised the Plaintiff that he wanted to sell the property to him. The Plaintiff however replied that he should do a proper valuation on the property before any sale can be considered. A valuation report accordingly was obtained from C.L Architecture dated October, 1995 and another report from a Government Valuer, Silva Dunge, dated 11th November, 1995. Following this, the Defendant appears to have settled on a price of CAD150,000.00. The Plaintiff states that after discussing the price with the Defendant and coming to an agreement about it, he made enquiries for a loan from his bank. He states that his request for a loan was approved verbally, but that the bank needed an agreement in writing to facilitate the transfer. On being told this, he again spoke with the Defendant before instructing Mr Kama to draw up a formal contract for sale and purchase of the Property. A copy of this written contract has been submitted to Court as Exhibit 4. For all intention purposes therefore, the Plaintiff submits there was a meeting of minds on the 15th of November, 1995. The Defendant wanted to sell and the Plaintiff wanted to buy. The property was identifiable and the price certain. The drawing up of the written agreement and execution were to be mere formalities reflecting the existence of the contract already concluded between the parties.

This raises the question when or how was the contract concluded on 15th November, 1995 and if acceptance was made, what was the consideration given for the offer of the Defendant?

It appears that the Plaintiff takes the view that had he not accepted the offer of the Defendant, he would not have taken steps to enquire and make arrangements about a loan from his bank and instructing Mr Kama, to draw up a written agreement for execution by the parties. In other words, acceptance was given and the contract concluded when he agreed to buy the property for CAD150,000.00.

Having thought carefully on the submissions presented on behalf of the Plaintiff, it is my respectful view that whilst the actions of the Plaintiff demonstrated agreement on the purchase price and an intent to purchase at the said price, I am not satisfied this amounted to acceptance of the offer to sell. From the evidence of the Plaintiff given before this Court, it is clear that whilst the Plaintiff accepted to buy the property at the price offered, it was subject to the availability of funds by way of a loan from his bank. The approval and payment of the loan in turn was subject to the production of a signed written agreement for sale and purchase of the said property between the parties. If there was any contract subsisting between the parties on 15th November, 1995, then clearly it was incomplete. How could it be, when no consideration had passed between the parties; not even any deposit had been paid. Up until the signing of the formal written agreement between the parties therefore, it was still open to the Defendant to change his mind about the sale of his house. And unfortunately for the Defendant this was what happened on 16th November, 1995. The Defendant changed his mind at the last minute.

There has been some suggestion that the payment of rent from the period from June, 1994 to November, 1995 were to be regarded as advances towards payment of the purchase price, and thereby consideration had been provided. Unfortunately, it is an established principle in contract law that past consideration is no consideration at all. The payment of rent from June 1994 to November, 1995 had not been made in return for the offer to sell the Property. It was for rental for that period. But what is of significance as well is that the draft agreement between the parties did not even contain any allusions to that suggestion.

I am strengthened in my view that the agreement reached between the parties on 15th November, 1995, was to be subject to a formal contract being drawn up, by the way the terms of the formal contract had been worded and drawn up. Paragraph (2) in particular makes time the essence of the contract.

"The Purchaser shall pay a 10% deposit to the Vendor’s solicitor on the signing hereof and shall pay the balance of $........................... within 30 days of the date hereof. If the sale and purchase is not completed within 30 days, other than because of a default by the Purchaser, the Vendor shall repay the entire deposit to the Purchaser."

Paragraph (2) above makes clear that the contract shall become binding on execution, subject to the various obligations stipulated in the contract. Paragraph 3 provides that transfer of title will be made on completion of payment of the full purchase price. The time limit given was 30 days, failing which, the Vendor is at liberty to rescind the agreement and repay the full deposit price. If the contract had been intended to be binding with effect from 15th November, 1995, (the date it was alleged to have been completed), then surely this would have been reflected in the written agreement. Time for instance would start to run from 15th November, 1995, and not from a date yet to be fixed. Any deposits that needed to be paid would have been paid on the same date as well.

I am satisfied no contract existed between the parties, and accordingly no rights could have been conferred. The claims for damages and specific performance therefore must be dismissed.

This brings me next to consider the counter-claim of the Defendant. The first claim is for rent arrears from 1st December, 1995 to 30th June, 1996; a total of $21,000.00. I am satisfied this should be allowed.

The second claim is for mesne profits at the rate of $3,000.00 per month from 1st July, 1996 until possession. Again I am satisfied this should also be allowed.

The third claim is for possession of the property. Naturally, reasonable time must be given to enable the Plaintiff seek alternative accommodation. In my view a minimum of thirty days must be given.

The fourth claim is for damages. No evidence has been adduced on this unless it was anticipated that this would be assessed in the event the counter-claim was allowed. The order of the court accordingly would reflect this.

Finally, interest should be allowed at the rate of 5% with effect from 1st December, 1995, and costs.

ORDERS OF THE COURT:

1. Dismiss claim of the Plaintiff in its entirety.
   
2. Allow counter-claim of the Defendant for:-
   

(a) rent arrears from 1st December, 1995 to 30th June, 1996 in the sum of $21,000.00;

(b) mesne profits at the rate of $3,000.00 per month from 1st July, 1996 until possession;

(c) possession of the property within thirty days of date of judgment;

(d) damages if any to be assessed;

(e) interest at the rate of 5% with effect from 1st December, 1995;

(f) costs.

THE COURT.