Harrigan et Al v Daniels et Al

• Jurisdiction: Anguilla
• Court: High Court (Saint Christopher, Nevis And Anguilla)
• Judge: Hariprashad-Charles J.
• Judgment Date: 29 February 2000
• Neutral Citation: AI 2000 HC 4
• Docket Number: Civil Suit No. 38 of 1997
• Date: 29 February 2000

High Court

Hariprashad-Charles, J.

Civil Suit No. 38 of 1997

Harrigan et al

and

Daniels et al

Appearances:

Mr. Patrick Patterson for the plaintiffs

Ms Joyce Kentish and Mr. Elton Gaskin for the defendants

Company law - Agreement by managing director to sell company property within the agreement of the shareholders — No enforceable contract.

Contract - Agreement for sale of properties — Whether binding and enforceable contract had been made. — No enforceable contract.

1 Hariprashad-Charles J. [Ag.]: The first and second-named plaintiffs are prominent and successful businessmen and real estate agents involved in the construction business on the quaint island of Anguilla. They are also Directors and Shareholders of the third-named plaintiff, Island Real Estate Company, an ordinary company limited by shares and registered under the Laws of Anguilla.

2 The first-named defendant is the majority shareholder and Managing Director of the second named defendant, a limited liability company incorporated in 1976 under the Companies Act, Cap.335. He is now retired and could be properly described as a failed businessman although he has over thirty years experience in business. In fact, he was one of the island's leading businessmen until financial difficulties succumbed him. As the years progressed, and in particular, the late eighties and early nineties, he became strapped in a financial coma from which he never recovered. In consequence thereof, his company became heavily indebted to the National Bank of Anguilla Limited [hereinafter referred to as “the Bank”]. By February 1997, the debt which had not been serviced for a number of years had escalated to E.C. 2,333,104.08 million dollars with interest accruing thereon. And the Bank had been pressing for repayment of its debt.

3 The debt to the Bank was secured by way of Registered Charges in respect of property and lands [hereinafter referred to as Parcel 24] owned by the company and personal property comprising lands and property owned by the first-named defendant [hereinafter referred to as Parcels 50 to 54]. At some time prior to 1975, Parcels 50 to 54 had been one parcel - Parcel 23 but was later subdivided to create the five parcels. The first-named defendant was the Guarantor of the company's indebtedness.

4 In an effort to reduce its indebtedness to the Bank, the defendant company with the consent of the Bank resolved to go into liquidation in or about 1995. In addition to a liquidation sale of some of the company's stock, the defendant company decided in 1995 to sell Parcel 24 to the Angelastris, an Italian couple for US $ 560,000.00. Parcel 24 comprised 0.49 acre of land with a building popularly known as the Galaxy Shoppe and a storeroom. A written agreement dated 3 ^rd day of May 1995 was entered into between Giacamo Angelastri and Juliet Angelastri of the one part and Galaxy Shoppe (Anguilla] Limited of the other part.

5 The sale and purchase agreement was frustrated by the death of Giacamo Angelastri. From the evidence, Mr. Angelastri died sometime after 15 ^th day of November 1995 while in Europe.

6 In 1996, Mrs. Angelastri and another Italian business partner re-opened negotiations with the defendants. During these negotiations, they confirmed the sale and purchase agreement of 3 ^rd day of August 1995 in respect of Parcel 24 and entered into another agreement with option to purchase Parcels 50 to 54 for U.S. 450,000.00. Misfortune once again struck when Mrs. Angelastri's investment partner suffered the fate of death; the consequential result being the frustration of both agreements.

7 In February 1997 the Bank, at the defendants' request gave them their last chance to effect a sale of the properties by private treaty in order to secure the best price possible, failing which it would put the properties up for sale by public auction.

8 During the said month of February 1997, negotiations began between the first-named defendant and the first and second-named plaintiffs for the purchase of Parcel 24 and Parcels 50 - 54. Parcels 50 - 54 are owned solely by the first-named defendant. At the time of the negotiations, Mr. Frederick Harrigan was the first vice-chairman and a Director on the board of the Bank. The evidence further revealed that Mr. Daniels had been in negotiations with other persons prior to his negotiation with the Harrigans and these negotiations proved unsuccessful.

9 By letter dated 14 ^th day of February 1997, Mr. Daniels wrote to Mr. Roy Horsford, the General Manager of the Bank indicating that he had received a firm offer from Mr. Frederick Harrigan to purchase Parcel 24 and parcels 50 - 54 in the sum of U.S.$630,000.00 which he has accepted. In the said letter, he wrote:

“The amount of money agreed between Mr. Harrigan and myself (for the properties) is considerably less than what had been negotiated with the Angelastris in 1995. But then, the situation was much different. Today, for me, the properties have become untenable. In view of the circumstances mentioned above, I would like to reiterate my plea for relief on the interest of my loan, in a manner that allows me some semblance of dignity.”

10 There is diametrically opposed evidence as to the climate of the negotiations that eventually led to the acceptance of the offer of $630,000.00 for all of the charged properties from the Harrigans. The first and second-named plaintiffs testified that the climate was an amicable one and a handshake agreement. The first-named defendant contended that his agreement to the offer was secured in circumstances which amounted to unconscionableness and unfairness on the part of the Harrigans.

11 Suffice it to say, the Harrigans (acting for and on behalf of Island Real Estate Company Limited) and Mr. Daniels (acting in his own behalf in relation to the sale of Parcels 50 - 54 and on behalf of Galaxy Shoppe Limited in relation to Parcel 24)signed two Agreements on 24th day of April 1997.These Agreements were duly executed at the home of Mr. Joseph Norris Payne, a Commissioner for Oaths and Chairman of the Board of Directors of the National Bank of Anguilla.

12 The saga now begins. The evidence revealed that on the very next day after the signing of the two agreements; that is the 25 ^th day of April 1997 the first-named defendant telephoned Mr. Frederick Harrigan and declared that he wanted the agreements to be made null and void. He subsequently met with the first and second-named plaintiffs and reiterated his request. He was asked by the first and second-named plaintiffs to reduce his oral request into writing.

13 On 2 ^nd day of May 1997, the first-named defendant wrote a letter to the Harrigans. In the letter, he stated:

“I was mistaken as to the instructions given to me by the Board of Directors of the Galaxy Shoppe. It has now been made clear to me that the Board will not approve the agreement. Under those circumstances it is now apparent that I did not have the authority to execute the agreement. Therefore, I request that you consider the agreement null and void.”

14 The evidence revealed that the written consent of the bank, as provided for in Clause 6 of the agreements was not obtained and no further step was taken by the defendants to effect the sale of the property to the plaintiffs. In fact, there is ample evidence to show that Mrs. Valerie Banks, a daughter of the first-named defendant and a shareholder and director of the second-named defendant, Galaxy Shoppe Limited [and incidentally the then wife of Mr. Valentine Banks] raised objections immediately to her father in respect of the price paid by the first and second-named plaintiffs for the sale of the properties. So much so, that she was instrumental in securing a cheque equal to that paid by the first and second-named plaintiffs, bearing the name of Osbourne Flemming which she presented to Mr. Valentine Banks the said afternoon that a meeting of the Delinquent Loans Committee of the Board of Directors was being held at the Mitchell's Chambers, Solicitors for the Bank. Mrs. Banks testified that the purpose of the cheque was “to save the company”.

15 In the intervening period, the first and second-named plaintiffs made an application to the Registrar of Lands requesting that a restriction be placed on the various parcels of land under section 132 of the Registered Lands Ordinance, 1974. On 12 ^th day of May 1997, the Registrar of Lands ordered a restriction on Block 48813 B Parcels 24, 50, 51, 52, 53 and 54 preventing any dealings until authorized in writing by the Registrar of Lands in accordance with Section 132(1) of the Registered Land Ordinance 1974. To date, the restriction has not been removed.

THE CRUCIAL ISSUES

16 The crucial issues to be determined are:

• (i) Whether the first and second-named plaintiffs have locus standi in this matter?

• (ii) Whether the agreements signed on 24 ^th day of April 1997 create a binding and enforceable contract for the sale of Parcel 24 and Parcels 50, 51, 52, 53 and 54?

• (iii) Whether the agreements are liable to be set aside in equity on the ground:

  • (a) That they represent an unconscionable bargain or were made in circumstances of economic duress such that they are unenforceable against the defendants;

  • (b) That the plaintiffs seeking specific performance did not come with clean hands.

(i) LOCUS STANDI OF FIRST AND SECOND-NAMED PLAINTIFFS

17 Learned counsel for the defendants, Ms. Joyce Kentish submitted that the first and second-named plaintiffs have no locus standi to sue and obtain reliefs. According to her, the evidence adduced in this court revealed that they were acting on behalf of a disclosed principal and that being the case, any rights and obligations which arose under the agreements could only be prosecuted by the third-named plaintiff, the disclosed principal. In support of her contention, counsel cited the case of Montgomerie v...