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

• Jurisdiction: Anguilla
• Court: High Court (Saint Christopher, Nevis And Anguilla)
• Judge: Edwards J
• Judgment Date: 30 June 2003
• Neutral Citation: AI 2003 HC 4
• Docket Number: No. 119 of 1998
• Date: 30 June 2003

High Court

Edwards, J.

No. 119 of 1998

Webster et al

and

Hotel De Health (Caribbean) Inc. et al

Appearances:

Ms. Joyce Kentish and Mr. E. Gaskin for plaintiffs/claimants

Mr. Mark Brantley for defendants

Contract - Agreement — for sale of land — Mistake as to meaning of clause dealing with payment of balance of purchase price — Whether a unilateral mistake — Whether defendants gave plaintiffs fraudulent assurances on which they relied in relation to the change in manner of reflecting the purchase price in the final agreement — Common intention of parties — Whether a good case for rectification.

Edwards J

1 Undertaking conveyancing negotiations without the advice of a lawyer is very often venturesome and fraught with danger. This action provides a classic example of the problems that can arise from such transactions.

2 Mr. Ronald Webster is a well-known businessman and large landowner in Anguilla. In January 1996, Mr. Webster and his wife Mrs. Cleopatra Webster owned 3.7 acres of land with buildings thereon, known as Palmgrove property, located at Seafeathers Bay in Anguilla.

3 Hotel de Health (Caribbean) Ltd. is a company registered in Anguilla. It is an affiliate of the Canadian Companies Hotel de Health and Canadian Medical Services Inc.

4 Mr. Robert Talbot is President of the Canadian Medical Services Inc., promoter and principal of the Hotel de Health (Caribbean) Ltd. (The Company), and a businessman residing at Seafeathers Bay.

5 Between January 1996 and March 1996, Mr. Webster and Mr. Talbot conducted negotiations between them for the sale of Palmgrove property to the Company.

6 The negotiations included written correspondence between them dated 11 ^th, 21 ^st and 26 ^th March, 1996. Upon the discovery that the purchase price would not be paid lump sum by the Company, Mr. Webster, by letter dated 21 ^st March, 1996, corrected Mr. Talbot's misunderstanding the he was “prepared to finance the facility for a period of time.”

7 By this same letter, Mr. Webster informed Mr. Talbot that what he had told him was that the purchase price including interest was US$3,300,000.00. Further, that he was prepared to accept payment of the interest $300,000.00 up front and the principal to be paid within 10-12 years.

8 On the 26 ^th March, 1996, Mr. Talbot wrote to Mr. Webtser, agreeing to pay a total of principal plus interest of US$3,3000,000.00 for the property, subject to four changes relating to down payments and closing date. Mr. Talbot also stated his readiness to prepare the formal offer for signatures and move ahead immediately with the necessary documentation for closing on July 31, 1996, if his acceptance subject to the changes was acceptable to Mr. Webster. It is disputed that there were further negotiations between them up to the 25 ^th April, 1996. Mr. Talbot also denies that prior to the signing of the Agreement he had telephoned Mr. Webster, telling him that for the purposes of his partners and finance Department, he wished to see the schedule reflected in a different light, but it would not affect the payment of $3.3 million.

9 Mr. Talbot gave instructions to Mr. Keithley Lake, solicitor for the Company to prepare the Agreement for sale of the property. Clause 1 of this Agreement shows that the Purchase price is US$1,090,000.00.

10 Clause 1(a) refers to the Purchaser's deposit of US$10,000.00 which is to be held in escrow on signing. Clause 5 refers to the Purchaser paying US$180,000.00 to the Sellers on closing date 31 ^st July, 1996.

11 Clause 7 refers to the Balance of the Purchase price — US$910,000.00 attracting an interest of 10% per annum on the outstanding balance, until final payment, with power to repay without penalty. The US$910,000.00 is to be paid to the Sellers in accordance with the terms in Schedule 2 attached and incorporated in the Agreement.

12 Schedule 2 refers to the Original Purchase Price as US$3,300,000.00. It shows the total payments as $3,300,000.00, the total principal payments as $1,090,000.00 and the total interest as $2,210,000.00.

13 The Executed Agreement which is dated 26th April, 1996 was signed in Mr. Keithley Lake's office and in his presence.

14 The facts surrounding the signing by Mr. And Mrs. Webster are disputed. What is clear is that Mr. Webster did not obtain any independent legal advice prior to signing the Agreement, despite his anxiety about Clause 7.

15 The Company failed to make timely quarterly payments as prescribed in the schedule. As a result of default in payments, and his anxiety about Clause 7, Mr. Webster obtained legal advice in March 1998.

16 The parties and their lawyers exchanged correspondence and convened two meetings in an attempt to resolve the problems.

17 Following the meetings, there was a further exchange of correspondence which exacerbated the situation. The defendants' final position was that they were relying on the purchase price being US$1,090,000.00 as expressed in Clause 1. They also maintained that based on Clauses 1 and 7, in the event of early repayment, the Websters would be paid US$1,090,000.00 plus interest accrued to date of repayments. Consequently this action was filed on the 30 ^th November, 1998. The Websters are seeking, among other things, to have the Agreement rectified to show the purchase price as US$3 million. The Defendants are resisting this. They say the agreed purchase price was US$1,090,000.00 as stated in the Agreement.

18 Before I consider the pleadings and evidence, it is necessary to identify the guiding principles that I must apply in this matter. I will first consider the law on Rectification, and then deal with the pleadings, evidence and submissions of Counsel for the parties.

LAW ON RECTIFICATION

19 The Websters say they were mistaken about the true meaning of Clause 7 and the early repayment provision. I am dealing here with a unilateral mistake. The decision in Thomas Bates and Son Ltd. v. Wyndham's (Lingerie) Ltd. [1981] 1 ALL ER 1077 (C. A.) is applicable to the instant case. It involved a unilateral mistake. It establishes the current law on Rectification. It is useful to state the facts.

20 The case involved an oversight of landlords which resulted in the omission of a provision for the fixing of rent by arbitration, in default of agreement on a rent review. The landlords had prepared a new lease for 14 years, and the rent per annum for the first 5 years was

L 2,350.00 subject to review every 5 years thereafter. The omitted provision was a term in the previous lease between the parties, which had an option for the new lease to be in terms similar to the previous lease. There had been no agreement to omit the arbitration provision. Though the tenants were aware of the omission at the time they executed the lease, they did not bring it to the landlord's attention.

21 When the time came for rent review, the landlords discovered the omission. The tenants rejected the landlords' proposed rent and the referral of the matter to arbitration. The landlords therefore brought an action claiming (i) a declaration that the rent payable should be the market rent for the premises, and (ii) Rectification of the rent review clause to provide for determination of the rent by arbitration in default of Agreement.

22 The tenants' appealed the decision of the judge, who granted the declaration and rectification in terms of the requests in the claim. The Court of Appeal held:–

• (i) Where two parties to an instrument had a common intention and it was shown

  • (a) that the plaintiff erroneously believed that the instrument gave effect to that intention;,

  • (b) that the defendant knew that the instrument did not do so, because by reason of the plaintiff's mistake the instrument contained or omitted something;

  • (c) that the defendant failed to bring the mistake to the plaintiff's notice, and

  • (d) that the mistake would benefit the defendant or merely that it would be detrimental to the plaintiff,

  the court was entitled to conclude that the defendant's conduct was such that it would be inequitable to allow him to resist, or that he should be stopped from resisting rectification of the instrument.

• (ii) That the omission occurred as a result of the landlords' mistake and was contrary to the landlords' interests. That the parties had a common intention to include the omitted provision in the new lease which was evident from the option in the old lease. Since the tenants had realized the landlords' mistake and had not brought it to his attention, the landlords were entitled to rectification claimed.

23 In addressing the point as to what was the legal burden of proof in cases of Rectification, Buckley J A. had this to say (page 1085 para a to b):

“….. in some cases the standard has been equated with the criminal standard of proof, ‘beyond all reasonable doubt.’ I think that the use of a variety of formulations used to express the degree of certainty with which a particular fact must be established in civil proceedings is not very helpful and may, indeed be confusing. The requisite degree of cogency of proof will vary with the nature of the facts to be established and the circumstances of the case. I would say that in civil proceedings a fact must be proved with that degree of certainty which justice requires in the circumstances of the particular case. In every case the balance of probability must be discharged, but in some cases that balance may be more easily tipped than in others.

In Hornal v. Neuberger Products Ltd. [1956] 3 ALL ER 970 at 973, Denning LJ said:–

The more serious the allegation, the higher the degree of probability that is required, but it need not, in a civil case, reach the very high standard required by the criminal law.

That, in my judgment, encapsulates the law about the standard of proof required in civil proceedings applicable to all civil proceedings, and is as applicable...