Grant v King Mitchell
| Jurisdiction | St Vincent and the Grenadines |
| Judge | Bruce-Lyle, J |
| Judgment Date | 01 March 2007 |
| Neutral Citation | VC 2007 HC 7 |
| Date | 01 March 2007 |
| Court | High Court (Saint Vincent) |
| Docket Number | 183 of 2005 |
High Court
Bruce-Lyle, J.
183 of 2005
Mr. Duane Daniel for the claimant.
Mr. Sylvester Raymond-Cadette and Mr. Emery Robertson Senior for the defendant.
Damages - Breach of contract — Agreement that the defendant would transfer a share in property to the claimant in exchange for claimant's managerial services — Frustration not substantiated — Quantum.
The claimant and the defendant both reside in Union Island, in the State of Saint Vincent and the Grenadines. On the 29th June 2004 both parties agreed that the defendant would transfer 35% of his interest in a property called the Sunny Grenadines Hotel situate in Union Island, in return for the expertise and managerial skills of the claimant in managing the said hotel. The hotel at the time was valued at $2.3 million. It was to be transferred to a company incorporated by the parties with the terms of the agreement to be agreed by both parties before the formation of the company.
This company would then have been the vehicle through which the project was to be facilitated. The claimant as per the contract agreement would give her time, skill and expertise in management and marketing for a 7-year period effective from the 29th June 2004.
Matters did not go as planned, leading to this suit which is based on a breach of the said agreement or contract dated the 29th June 2004 and made between the parties to this suit.
The claimant in her evidence contends that the defendant at all material times maintained that he held the property absolutely either in his personal capacity or in a body corporate over which he had complete, exclusive and unfettered control.
She further contended that the defendant did not effect transfer of title to the company as per the contract and told the claimant that she was no longer part of the project. The claimant sent the defendant a notice of breach and asked the defendant to remedy the breach within 14 days.
According to the claimant, the defendant did not remedy and reiterated that the claimant was no longer a part of the project and questioned her status in relation to the agreement and further pleaded frustration on the basis that there were additional shareholders; previously undisclosed who did not agree to the transfer of the property.
The claimant therefore claimed as pleaded in her statement of claim:–
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(a) A declaration that the claimant has a beneficial interest in the property situate at Union Island and known or described as Sunny Grenadines Hotel.
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(b) Compensation for services:
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(i) Creation of plans and drawings
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(ii) Interior decorating
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(iii) Project Management.
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(c) Special Damages in the sum of EC$198, 821.79.
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(d) Damages for breach of contract equivalent to 35% of the property known or described as Sunny Grenadines Hotel.
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(e) Loss of Profits.
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(f) Interest.
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(g) Costs.
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(h) Further or other relief,
I need to state at this stage of the judgment that the claimant, which is undisputed, was to use her expertise in design, interior decorating, architectural drawing etc. to manage the refurbishment, as well as contribute to the refurbishment in the ratio of 35% to her and 65% to the defendant.
The defendant's case was that the claimant is in breach of contract by incorporating the contract in a manner inconsistent with the terms of the contract; and secondly that the contract has been frustrated by virtue of the fact that the hotel which forms the subject matter of the agreement is owned by a domestic company, Mitchell's Hardware Ltd and no privity of contract exists between the claimant and Mitchell's Hardware Ltd., and thirdly, that the incorporating of the company by the claimant was repugnant to the provisions of the Aliens (Landholding Regulations) Act,
I prefer to deal with this third area of the defendant's defence first. It is my view from the evidence and having analyzed both arguments for the claimant and the defendant on this issue that there is no evidence to support any view that what the claimant did by way of incorporating the company mentioned in evidence was repugnant to the provisions of the said Alien (Landholding Regulations) Act. If the defendant maintains that the transfer of the hotel to the company cannot take place by virtue of the fact that the existing shareholders of Mitchells' Hardware Ltd will not transfer, of what purpose or effect is any licence? The position would have been different if the defendant was in a position to transfer and did cause the transfer of the hotel to the company so incorporated, or did not transfer the hotel to the company at all for fear of some illegality. If the above scenario had taken place and the claimant had sent the defendant a letter informing or complaining of such breach, the defendant would have been in a fine position to make illegality and/or any attendant licence an issue.
The defendant has made much about this issue pertaining to the Alien (Landholding Regulation) Act. In my view this is a non-issue and that ground of defence is hereby dismissed.
I now turn to the alleged breach of the claimant. This contract was exhibited as Ex. H.G. 2 by the claimant. Section 4(a)(i) and (ii) of the contract provides as follows:
“(i) The parties shall incorporate a company (hereinafter referred to as the Company) which shall be the vehicle through which the project is to be facilitated.
(ii) The name of the company is to be chosen by the Manager.”
In paragraph 20 of her claim, the claimant states:
“(20) The claimant in pursuance of all her obligations per contract incorporated a domestic company in the State of Saint Vincent and the Grenadines, date of incorporation 29th October 2004, company No. 106 of 2004 …”
and by paragraph 27 of her witness statement:
“(27) In pursuance of all my obligations per contract I incorporated a domestic company…”
From this it is clear that the claimant readily admits that it was she who incorporated the Company in late October 2004. It is evident from the evidence adduced by the claimant under cross-examination that the claimant explained that she had desperately contacted the defendant to assist with the incorporation, as it was through the company that funds were to be channelled instead of the joint account which was still in use in October 2004 and up to the time the claim was filed. This joint account was an interim measure to manage the pre-incorporation money.
The contract was signed on the 29th June 2004. Four months later after asking the defendant several times to incorporate with her and having received no positive response, the claimant incorporated the company and furnished the defendant with copies of all the documents. At this stage the defendant made no allegation or complaint that there was any breach of the agreement. The claimant further stated under cross-examination that if the defendant took serious issue with the company as incorporated, she would have been only too happy and willing to incorporate another company to satisfy the defendant.
I therefore ask myself – Where is the breach of contract as alleged by the defendant? The simple answer is that the claimant is not in breach as alleged or at all, and that she acted prudently in the circumstances when it is clear that it was the defendant who was not conforming to the terms of the contract, and I so hold. This ground of defence fails miserably, and it is also dismissed.
This leaves me with the last ground of defence as posited by the defendant – frustration of contract. It was advanced by the defendant that the company has a separate legal personality and is not bound by the contract as it is not a signatory to the contract. At no time does the claimant seek to challenge the fact that Mitchell's Hardware Ltd has separate legal personality. The claimant's case rather is that the defendant is personally liable. It is also her case that the defendant contracted with her the claimant and represented to her that he owned the hotel, either in his personal capacity or that he exclusively owned a company over which he had complete ownership and control. She further alleged that the defendant induced the claimant to sign, by promising in return, under contract, a 35% (per cent) share in the hotel, which the defendant maintained that he owned. The hotel, before restoration and refurbishment was valued at $2,304,220.
The claimant's case therefore is that the defendant is personally liable to the claimant for her loss and that the defendant should not be allowed to rely on the principle of frustration to avoid damages to be paid to the claimant for breach of contract. The claimant relies on the fact that the defendant must have known as he was the Managing Director of Mitchell's Hardware Ltd, the company which owns the hotel, that he would require the permission and consent of the other shareholders to affect the transfer as per contract. It is interesting to note that the defendant by the very contractual terms represented that he owned the hotel absolutely.
The defendant on the other hand states that the claimant was aware that Mitchell's Hardware Ltd owned the hotel as this was discovered by counsel for the claimant “before the contract was drafted and signed” For avoidance of doubt I...
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