Hotel de Health (Caribbean) Inc. et Al v Webster et Al

• Jurisdiction: Anguilla
• Judge: Saunders, C.J.,Alleyne, J.A.,D'Auvergne, J.A.
• Judgment Date: 14 February 2005
• Neutral Citation: AI 2005 CA 1
• Docket Number: Civil Appeal No. 8 of 2003
• Date: 14 February 2005
• Court: Court of Appeal (Anguilla)

Court of Appeal

Saunders, C.J. (Ag.); Alleyne, J.A.; d'Auvergne, J.A. (Ag.)

Civil Appeal No. 8 of 2003

Hotel de Health (Caribbean) Inc. et al

and

Webster et al

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.

Contract - Mistake — Common intention — Unjust enrichment — Agreement for sale of property — Antecedent agreement that purchase price of property together with interest over twelve years to be $3.3 million — Formal agreement indicating fictitious price to accommodate purchaser's fiscal arrangements and shareholder obligations in Canada — Vendor seeing fictitious figure and disputed clause before signing — Whether mistake made out — Whether rectification to be ordered — Finding that legal concept of mistake not proved — Rectification refused.

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.

2 The agreement concerned the sale of a property at Seafeather Bay owned by the Websters. W. Webster and Mr. Talbot had held discussions on the matter. On 11th 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 21st 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 totalled $3.3 million.

4 Mr. Talbot responded on 26th 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:

) 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.

1 If the above is acceptable to you, we will prepare the formal offer for signatures and move ahead immediately with the necessary documentation 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 26th 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 31st 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 payment WITH 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 totalled $3.3 million. The Agreement had appended to it a Schedule with the following amortization table:

Filename: A:\Web0418.wk4

94A-WEBSTER PROPERTY INPUTTED INTEREST CALCULATION

SCHEDULE 2

Quarter #	Date	Year	In US $ Balance Outstanding	In US $ Total Payments	In US $ Interest Payments	In US $ Principle Payments
			3,300,000.00
	July 31	96	3,290,000.00	10,000.00		10,000.00
1	Jan 31	97	3,120,000.00	170,000.00	78,000.00	170,000.00
2	April 30	97	3,082,000.00	37,500.00	77,082.50	(40,500.00)
3	July 31	97	3,045,000.00	37,500.00	76,125.00	(39,562.50)
4	Oct 31	97	3,007,500.00	37,500.00	75,187.50	(38,625.00)
5	Jan 31	98	2,970,000.00	37,500.00	74,250.00	(37,687.50)
6	April 30	98	2,932,500.00	37,500.00	73,312.50	(36,750.00)
7	July 31	98	2,895,000.00	37,500.00	72,375.00	(35,812.50)
8	Oct 31	98	2,857,500.00	37,500.00	71, 437.50	(34,875.00)
9	Jan 31	99	2,820,000.00	37,500.00	70, 500.00	(33,937.50)
10	April 30	99	2,770,000.00	50,000.00	69, 250.00	(20,500.00)
11	July 31	99	2,720,000.00	50,000.00	68, 000.00	(19,250.00)
12	Oct 31	99	2,670,000.00	50,000.00	66, 750.00	(18,000.00)
13	Jan 31	0	2,620,500.00	50,000.00	65, 500.00	(16,750.00)
14	April 30	0	2,570,000.00	50,000.00	64,250.00	(15,500.00)
15	July 31	0	2,520,000.00	50,000.00	63,000.00	(14,250.00)
16	Oct 31	0	2,470,000.00	50,000.00	61,750.00	(13,000.00)
17	Jan 31	1	2,420,000.00	50,000.00	60,500.00	(11,750.00)
18	April 30	1	2,380,000.00	60,000.00	59,000.00	(500.00)
19	July 31	1	2,300,000.00	60,000.00	57,200.00	1,000.00
20	Oct 31	1	2,240,000.00	60,000.00	56,000.00	2,500.00
21	Jan 31	2	2,180,000.00	60,000.00	54,500.00	4,000.00
22	April 30	2	2,120,000.00	60,000.00	53,000.00	5,500.00
23	July 31	2	2,060,000.00	60,000.00	51,500.00	7,000.00
24	Oct 31	2	2,000,000.00	60,000.00	50,000.00	8,500.00
25	Jan 31	3	1,940,000.00	60,000.00	48,500.00	10,000.00
26	April 30	3	1,865,000.00	75,000.00	46,625.00	26,500.00
27	July 31	3	1,790,000.00	75,000.00	44,750.00	28,375.00
28	Oct 31	3	1,715,000.00	75,000.00	42,675.00	30,250.00
29	Jan 31	4	1,640,000.00	75,000.00	41,000.00	32,125.00
30	April 30	4	1,585,000.00	75,000.00	39,125.00	34,000.00
31	July 31	4	1,490,000.00	75,000.00	37,250.00	35,875.00
32	Oct 31	4	1,415,000.00	75,000.00	35,375.00	37,750.00
33	Jan 31	5	1,340,000.00	75,000.00	33,500.00	39,625.00
34	April 30	5	1,265,000.00	75,000.00	31,625.00	41,500.00
35	July 31	5	1,190,000.00	75,000.00	29,750.00	43,375.00
36	Oct 31	5	1,115,000.00	75,000.00	27,875.00	45,250.00
37	Jan 31	6	1,040,000.00	75,000.00	26,000.00	47,125.00
38	April 30	6	965,000.00	75,000.00	24,125.00	49,000.00
39	July 31	6	890,000.00	75,000.00	22,250.00	50,875.00
40	Oct 31	6	815,000.00	75,000.00	20,375.00	52,750.00
41	Jan 31	7	740,000.00	75,000.00	18,500.00	54,625.00
42	April 30	7	665,000.00	75,000.00	16,625.00	58,500.00
43	July 31	7	590,000.00	75,000.00	14,750.00	56,375.00
44	Oct 31	7	515,000.00	75,000.00	12,875.00	60,250.00
45	Jan 31	8	440,000.00	75,000.00	11,000.00	62,125.00
46	April 30	8	330,000.00	110,000.00	8,250.00	99,000.00
47	July 31	8	220,000.00	110,000.00	5,500.00	101,750.00
48	Oct 31	8	110,000.00	110,000.00	2,750.00	104,500.00
			0.00	110,000.00		107,250.00
Total				3,390,000.00	2,210,000.00	1,090,000.00

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...