Privy Council rules in Maraval property sale dispute

THE Privy Council has upheld the appeal of four siblings who were included in a dispute over the sale and resale of 30 acres of land at St Rose Estate, Maraval.

The siblings – Frederick Donowa, Vigilia Bernard, Neville Donowa and Maria Donowa – were ordered to compensate Donridge Heights Ltd, which agreed to buy the 30 acres from Greenfield Properties Ltd, which previously entered into an argeement with the siblings to develop in stages the larger portion of 70 acres they had inherited from their mother.

Greenfield’s principal Howard John had agreed to acquire the 70 acres, but did not have the full purchase price. John proposed the develop the lands and would pay the siblings when he got income from selling the property.

The siblings entered an agreement with Greenfield in May 2006. In June 2008, Greenfield entered into sale contracts with Donridge Heights.

However, Greenfield defaulted on its obligations with the siblings and Dondridge.

“Development work ceased and Greenfield has since disappeared without trace,” the Privy Council ruling noted.

Donridge then sued Greenfield for compensation and, “having obtained a worthless default judgement,” amended its claim to join the siblings, arguing that Greefield acted as their agent, so they were liable for breach of the 2008 sale agreements.

The High Court ordered the siblings and Greenfield to pay Donridge for breach of contract.

The siblings appealed and the Court of Appeal dismissed their challenge. They then appealed to the Privy Council. Their dispute was heard by Lords Hodge, Briggs, Hamblen, Stephens, and Richards.

In their ruling, the Privy Council judges said an important feature of the 2006 agreement was the insulation of the siblings from risk.

“The trial judge thought that, by contrast with agency, a sale would expose the appellants to the risk of non-payment by Greenfield but, with respect, he does not appear to have taken into account the protection afforded to the appellants by way of unpaid vendors’ lien.

“This appears to have been a main ground for his finding of agency rather than sale.”

Lord Briggs, who wrote the decision, said the reasoning by the High Court and the Court of Appeal appeared to be reliant on an assumption that, having retained legal title to the property, and not having been paid for it in full, the siblings “must be taken to have clothed Greenfield with their authority to sell lots to end-users, thereby necessarily constituting Greenfield as their agent for that purpose.”

However, he said, despite deferment of part of the purchase price, the 2006 agreement conferred immediate beneficial ownership of the property on Greenfield, which “was free to develop, divide and on-sell it to sub-purchasers, like any buyer of land can do under an uncompleted contract for sale with power to direct to whom the appellants should transfer legal title, subject to their unpaid vendors’ lien.”

For those reasons the siblings’s appeal was allowed.

They were represented by Navindra Ramnanan and Riaz Seecharan. Dondrige did not appear at the Privy Council and was unrepresented.