[1] Hotel De Health (Caribbean) Inc. [2] Robert Talbot Appellants v [1] Ronald Webster [2] Cleopatra Webster Respondents [ECSC]

• Jurisdiction: Anguilla
• Judge: SAUNDERS, C.J. [AG.]:,SAUNDERS, C.J. [AG.],Chief Justice [Ag.],Justice of Appeal,Adrian Saunders,Suzie d'Auvergne,Justice of Appeal [Ag.]
• Judgment Date: 14 February 2005
• Judgment citation (vLex): [2005] ECSC J0214-1
• Docket Number: CIVIL APPEAL NO.8 OF 2003
• Date: 14 February 2005
• Court: Court of Appeal (Anguilla)

[2005] ECSC J0214-1

IN THE COURT OF APPEAL

Before:

The Hon. Mr. Adrian Saunders Chief Justice [Ag.]

The Hon. Mr. Brian Alleyne, SC Justice of Appeal

The Hon. Ms. Suzie d'auvergne Justice of Appeal [Ag.]

CIVIL APPEAL NO.8 OF 2003

Between:

[1] Hotel De Health (Caribbean) Inc.

[2] Robert Talbot

Appellants

and

[1] Ronald Webster

[2] Cleopatra Webster

Respondents

Appearances:

Mr. Mark Brantley with Mrs. Cora Richardson Hodge for the Appellant

Ms. Joyce Kentish with Ms. Navine Kisob-Fleming and Mr. George Lake for the Respondent

1 SAUNDERS, C.J. [AG.]: Mr. & Mrs. Ronald Webster brought a claim for rectification of a written agreement and specific performance of the agreement as rectified. The defendants to the action were a company incorporated in Anguilla along with Mr. Robert Talbot, the promoter of the company. The agreement in question had been negotiated by Mr. Webster and Mr. Talbot. The Judge gave judgment for the Websters and the defendants have appealed.

SAUNDERS, C.J. [AG.]

2 The agreement concerned the sale of a property at Seafeather Bay owned by the Websters. Mr. Webster and Mr. Talbot had held discussions on the matter. On 11^th March, 1996, Mr. Talbot sent to Mr. Webster a formal proposal setting out "terms and conditions in order to move ahead". The terms expressed a "total purchase price including all interest and principal" of $2.8 million payable over a period of twelve years. Actual quarterly payments and their due dates were also set forth in the proposal. This proposal did not stipulate what proportion of the $2.8 million was principal and what sum represented interest.

3 Mr. Webster made a comprehensive written response on 21^st March, 1996. He stated that he had made "a few minor changes that in my opinion will not create any problem". His letter appeared to have been predicated upon prior oral discussions because he reiterated that the actual purchase price including interest was $3.3 million and he stated that:

"I was prepared to accept $300,000.00 up front and that the principal to be paid within 10–12 years. When I mentioned interest of $300,000.00 over a period of 10–12 years that that sum is only a token figure to compare with the real figure on remaining balances, but I know what was said was done in good faith knowing that expenses will be incurred by you in order to bring the facility up to standard. So I stick to my commitment…"

Mr. Webster also set out his own preferred payment plan. There was to be a down payment of $20,000.00 on acceptance of the offer and a further down payment of $160,000.00 at the closing. Mr. Webster wrote out in hand his own quarterly payment schedule spread over 12 years. All of the payments totaled $3.3 million.

4 Mr. Talbot responded on 26^th March, 1996 in this fashion:

"I have reviewed the information that has been faxed to me concerning the changes. I agree to pay a total price of principal and interest of $3,300,000 U.S.

It was obviously my misunderstanding related to the full price.

The only changes I would like to see are the following:

• 1) Down payment on acceptance of offer —$10,000.00 U.S.

• 2) Amount to be paid on closing —$170,000.00 U.S.

• 3) Closing to occur on July 31, 1996.

• 4) In regard to the final payments, I would like the option to spread them over two (2) years rather than just one year. As mentioned, this is an option and gives us a certain flexibility should the need arise.

If the above is acceptable to you, we will prepare the formal offer for signatures and move ahead immediately with the necessarydocumentation for closing on July 31, 1996. Also please be aware of the fact that the formal offer will come from an Anguilla Corporation. I look forward to hearing from you in the near future".

5 The next document pertinent to this transaction and exhibited before the court was a formally drawn up "Agreement for Sale and Purchase of Real Estate". This document was prepared by Attorney-at-Law Mr. Keithley Lake on the instructions of Mr. Talbot. It is the document that was ultimately presented to the Websters for their signature. The agreement is dated 26^th April, 1996 but there is some dispute as to when it was first seen by the Websters and actually signed by them. The agreement states that the property was being sold for US$1,090,000.00 exclusive of interest. Provision is made, upon the signing of the agreement, for a lump sum payment of $10,000.00 to be paid by the purchaser and held by Mr. Lake's office in escrow pending the closing. The agreement stipulates a closing date of 31^st July, 1996. On that date a lump sum payment of $180,000.00 was to be made to the Websters.

6 Clause 7 of the agreement is the provision over which much of the controversy between the parties rests. That clause stated:

"The balance of the purchase price of …US$910,000.00 will be paid to the Sellers in accordance with the terms set forth in Schedule 2 attached hereto and incorporated herein. The Purchaser agrees to pay interest at the rate of ten per cent (10%) per annum on the outstanding balance of the Purchase Price until the final paymentwith power to repay without penalty" (my emphasis).

The agreement also provided for interest payments to be made, spread over a twelve year period. The principal of $1,090,000 plus the interest payments over that period totaled $3.3 million. The Agreement had appended to it a Schedule with the following amortization table:

7 The Websters executed this agreement. They signed it expecting that they were going to receive a total of $3.3 million over a twelve year period. But they also signed it well aware of what was expressly stated in Clause 7. Some time after the agreement was signed and already in force, the Websters sought to have it rectified. Negotiations between the parties to this end bore no fruit and the Websters ultimately brought this action.

8 The action is premised on the contentions that: the true and agreed purchase price of the property is and always was $3 million plus interest of $300,000.00; that Mr. Talbot fraudulently inveigled the Websters to execute an agreement containing an artificial purchase price of $1,090,000.00 plus payments of interest; that the Websters agreed to this artifice solely in order to accommodate Mr. Talbot's fiscal arrangements and shareholder obligations in Canada; that it was never the common intention that the Websters would be prejudiced by granting Mr. Talbot this accommodation; that in any event the Websters did not fully comprehend the true meaning of the pre-payment clause; that they did not have the benefit of independent legal advice; that the written agreement represented an unconscionable bargain; that Mr. Talbot would be unjustly enriched if the Websters were stuck with the agreement as executed; that Mr. Webster had relied on the assurances of Mr. Lake that the Websters would not be prejudiced by the provisions of Clause 7; and that the Websters were mistaken as to the true meaning of Clause 7. In all these circumstances, the Websters allege, the court should rectify the document to reflect what they say is the true agreement of the parties.

9 The trial Judge heard testimony from Mr. Webster, Mr. Talbot and Mr. Lake among other witnesses. The Judge seemed not to have been wholly impressed either with the testimony of Mr. Webster or that of Mr. Talbot. The Judge preferred Mr. Lake's testimony to Mr. Webster's. The learned Judge reminded herself that in seeking to prove mistake the Websters had a high standard of proof but in the end, the Judge felt that this burden had been discharged. The Judge concluded that theAgreement dated 26^th April, 1996 ought to be rectified to reflect that the true purchase price of the property was $3 million plus a nominal interest of $300,000.00. The Judge did not think it necessary to make any considered finding on the allegations of fraud, unjust enrichment and unconscionable bargain which were pleaded by the Websters. The Judge also ordered the immediate payment of "the balance of the agreed purchase price outstanding together with interest thereon in the total sum of US$2,894,500.00".

10 I pause here to note that even if the judge were right in her legal conclusions, the order that was made, if carried out, would have resulted in a benefit to the Websters for which not even they had bargained. The substance of Mr. Webster's position was that the parties had agreed on the payment of $3.3 million over a 12 year period but the effect of the order made by the trial judge was to grant the Websters the full $3.3 million in an accelerated manner.

11 Counsel for the Websters sought to justify the order made by the Judge on the basis of one of the clauses of the agreement. That clause stated that if there was default by the purchasers in the payment of any installment of principal or interest, then the whole sum of principal and interest became due. Counsel alleges that the purchasers were in such default.

12 It appears that in the course of the carrying out of their agreement, the parties had encountered differences regarding certain payments that were to have been made by the purchasers. The latter had withheld or neglected to make payments totaling $157,000.00. That sum of $157,000.00 was however subsequently paid and received although the Websters had instructed their solicitors to keep the money in an interest bearing account pending their attempts to seek rectification. The Websters pleaded the non-payment of the monies as an act of default on the part of the purchasers justifying immediate payment of all principal and interest. The purchasers in their pleadings denied that they were in default. It does not seem as though this issue was pursued by either party at the trial and in her judgment, the trial judge did not explore the matter. Nor did the Judge make any findings of factrelative to it. In the circumstances, this court would hesitate to...