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Chandra v Ward [2008] FJHC 288; HBC153.2005 (6 June 2008)

IN THE HIGH COURT OF FIJI
AT LAUTOKA

CIVIL ACTION NO. HBC 153 OF 2005

BETWEEN

YOGESH CHANDRA aka NAVIN MORARJI
Plaintiff

AND

STEPHEN PATRICK WARD
Defendant

Appearances: Mishra Prakash & Associates for the Plaintiff
Young & Associates for the Defendant

Dates of Hearing: 30 October and 1 November 2006
Date of Judgment: 6 June 2008

JUDGMENT

[1] On 6 January 2005 the parties entered into a Sale and Purchase Agreement (the agreement) for the sale and purchase of the defendant’s freehold land comprised in Certificate of Title No 35620 situated at Marina Port, Denarau Island, (the property) for a consideration of $595,000.00 on 26 January 2005. Pursuant to the agreement the plaintiff paid a deposit of $59,500.00 and was to have settled the balance purchase price by 4 March 2005. The plaintiff claimed that by an email dated 10 March 2005 from the defendant’s solicitors to the plaintiff’s solicitors, the defendant extended the date of settlement from 4 March 2005 to 24 March 2005 unconditionally and requested funds in the sum of $11,900.00 being stamp duty payable on the transfer. The plaintiff claimed that by email dated 21 March 2005 the defendant purported to unilaterally rescind the agreement extending the settlement date to 24 March 2005 and withdrew the earlier extension of the settlement date.

[2] A cheque in the sum of $11,900.00 was sent to the defendant’s solicitors on 7 April 2005. The plaintiff alleged that by letter of 7 April 2005 the defendant’s solicitors purported to rescind the agreement for failure by the plaintiff to settle the balance purchase price by 4 March 2005. On 8 April 2005 the defendant’s solicitors returned the deposit of $59,500.00 and the stamp duty funds of $11,900.00. Caveat No 562836 was registered against the land on 8 April 2005 by the plaintiff forbidding the registration of any dealings. A notice to withdraw the caveat dated 5 May 2005 was served on the plaintiff.

[3] It was alleged that the defendant in purporting to rescind the agreement was unjustified and in contravention of terms and conditions in the agreement relating to termination and in breach of the extension agreement agreed to between the parties. The plaintiff claimed that the said attempted termination was null and void and of no effect.

[4] The plaintiff also alleged that the defendant was unable to complete as of 4 March 2005 having not provided executed transfer documentation or the relevant Deed of Commitment, which was not provided until 10 March 2005, six days after the original settlement date of 4 March 2005.

[5] It was also claimed that there would have been delays in the registration process because the defendant was making a net profit of $210,000.00 which would have been subject to Lands Sales Tax payable to the Inland Revenue Department. It was alleged that had the transfer been lodged for stamping on the date stamp duty was paid, it would have taken considerable time for the Inland Revenue Department to assess the tax payable by the defendant and that this exercise would have taken nothing less than one (1) month and that no settlement would have taken place until payment of the assessed Land Sales Tax and the release of the transfer documents.

[6] The plaintiff claimed to have suffered damages as a result of the defendant’s actions in rescinding the extended date of settlement and in rescinding the agreement. The principal relief claimed is an order for specific performance of the agreement.

Statement of defence and counter-claim

[7] The agreement, payment of deposit and emails of 10 and 21 March 2005 were admitted. The defendant claimed that the plaintiff, knowing that the transfer document had to be sent to New Zealand for execution, did not until 26 February 2005 forward a draft transfer for approval. Further that the plaintiff knew or ought to have known from his negotiation of the terms of the agreement that the defendant required settlement to take place "as soon as possible". It was alleged that the plaintiff was not ready and willing to settle on 4 March 2005. The defendant stated that the extension offered in the email of 10 March 2005 was conditional upon the plaintiff agreeing to 24 March 2005 as the new settlement date. The plaintiff, it was alleged, failed to confirm 24 March 2005 as the new settlement date within a reasonable time entitling the defendant to withdraw his offer of extension. Alternatively, it was claimed, the offer to extend lapsed for non-confirmation within a reasonable time. Consequently, upon withdrawal of the offer by the defendant, or upon lapse of the proposed extension for non confirmation by the plaintiff, settlement was required to take place within 30 days of 4 March 2005 in terms of clause 15 of the agreement. The defendant claimed that as the plaintiff had failed to tender the purchase money or to show that he was ready and able to settle the purchase within 30 days of 4 March 2005, the defendant rightfully terminated the agreement by the letter of 7 April 2005 by returning the deposit and stamp duty to the plaintiff. The defendant claimed that his letter of 7 April 2005 was first in time and before the plaintiff’s solicitor’s letter of that date.

[8] The allegations of breach of the agreement were denied. By way of further defence, it was denied that the plaintiff was ready willing and able to settle on 24 March 2005 or within 30 days of 4 March 2005. By way of further defence, it was pleaded that the agreement is void and/or unenforceable for non-compliance of section 7 of the Lands Sales Act (Cap 137) in that the parties were at all material times, non- residents of Fiji as defined in section 7 of the Act.

[9] By way of counter-claim, the defendant claimed that the plaintiff did not have a caveatable interest in Certificate of Title No 35620 and therefore the original registration of Caveat No 562836 and its deliberate continuation was unjustified and wrongful. On 1 February 2005 the defendant entered into a backup Sale and Purchase Agreement with one Brett W Whittaker for the sale of the property for F$800,000.00. It was claimed that as a result of the plaintiff’s wrongful registration of Caveat No 562836 the defendant lost the sale to Brett W Whittaker who rescinded the agreement on 3 March 2006. The defendant alleged that as a consequence he suffered loss and damage including loss of a chance to make a profit.

The issues

Did the email dated 10 March 2005 from the defendant’s solicitors to the plaintiff’s solicitors extend the settlement date from 4 March 2005 to 24 March 2005 or did the email only comprise an offer to extend the settlement date from 4 March 2005 to 24 March 2005?

[10] The issue of whether the settlement date was validly extended by the 10 March 2005 email must be construed in the context of the agreement. Page 1 of the agreement stipulated 4 March 2005 as the settlement date. The words "or earlier" were inserted before the words 4 March 2005. Clause 4 of the agreement states:

"Settlement shall take place within 30 days from the date of signing of this Agreement If a date is not stipulated on page 1. This date can be extended if mutually agreed to in writing by both the Vendor and Purchaser" [emphasis added]

[11] The relevant portion of the 10 March 2005 email reads:

"Our client has now informed us that he would agree to an extension for settlement in this matter to the 24 March 2005. Please confirm by return".

[12] The defence of waiver of clause 4 of the agreement by the defendant was not pleaded. I have upheld the defendant’s submission in this regard.

[13] For the settlement date to have been validly extended, the agreement expressly prescribed that any agreement regarding extension be agreed to in writing by both the vendor and purchaser. A valid extension required the concurrence of both parties in writing. This was not done. Suffice it to say that clause 4 was not complied with. There is no evidence of any agreement in writing by both the vendor and purchaser extending the settlement date of 4 March 2005. The email dated 10 March 2005 could not have validly extended the settlement date given that that email did not reflect what was required for extension of the settlement date in terms of what the agreement prescribed must happened.

[14] In my view the email of 10 March 2005 could only have comprised an offer to extend the settlement date from 4 March 2005 to 24 March 2005. Clearly, Mr Parshotam’s earlier request for extension to 16 April 2005 was not accepted. The most cogent interpretation one can place on the words; "Please confirm by return.", is that the defendant’s lawyers had put the plaintiff’s lawyers on notice that confirmation of the offer to extend the settlement date to 24 March 2005 was required and anticipated. What was required of the plaintiff was an acceptance of the offer contained in the 10 March email. Before the condition of a mutual agreement in writing by both the vendor and purchaser occurred, the defendant through his lawyers withdrew the offer contained in their earlier email of 21 March 2005. Accordingly 4 March 2005 continued to be the settlement date and clause 15 of the agreement which required the vendor to wait for the default to continue for 30 days before the vendor could rescind, came into play. The 30 days expired on 3 April 2005.

Whether the defendant’s rescission of the agreement by letter of 7 April 2005 was valid and effective

[15] The defendant’s lawyers cancelled the agreement on 7 April 2005 by letter faxed to Parshotam & Co on 7 April 2005. Parshotam & Co’s letter on the same day followed Mitchell Keil & Associates letter. The letter by Mitchell Keil dated 8 April 2005 reasserted the rescission and returned the deposit of $59,500.00 and Parshotam & Co’s Trust Account cheque in the sum of $11,900.00 made out to the Commissioner of Stamp Duties. The defendant’s offer to extend having never been accepted entitled the defendant to withdraw the offer. The general rule that an offer may be revoked at any time until it is accepted is applicable. The rule applies even though the offeror has promised to keep the offer open for a certain time, for such a promise is unsupported by consideration and is therefore not binding.[1]

[16] Much reliance was placed on the plaintiff’s perception of the defendant’s inability to provide a transfer at settlement. Reliance was placed on the proposition that it would take considerable time to stamp the Transfer document. The plaintiff however did not lead evidence about the length of time it would have taken to have a stamped transfer released by the Stamp Duties office. Mr Morgan’s evidence that this could be done within five days was uncontested. I have also upheld the defendant’s submission that there could be no legal consequences under the agreement regarding the deed of commitment which was furnished by the defendant on 10 March 2005 as clause 16 provided that the consequences for default, had to continue for a period of 14 days. The deed of commitment was provided 8 days before the expiry of the 14 day period.

[17] I have also upheld the submission that the plaintiff by not furnishing the stamp duty funds until 7 April 2005 constituted sufficient conduct in itself absolving the defendant from demonstrating that he was ready, willing and able to settle. Given that 4 March 2005 was the settlement date and the default of not settling after the expiration of 30 days together with the fact that the plaintiff was required to have tendered the stamp duty before the settlement date or before the expiration of the 30 days made it unnecessary for the defendant to demonstrate that he was ready, willing and able to settle. In any event the evidence has established that the defendant was ready, willing and able to settle on 3 April 2005. By this date the transfer had already been executed. Mr Morgan testified that the defendant had sufficient funds in his lawyers Trust Account to pay land sales tax on the transaction. Mr Morgan testified that he could have obtained the release of the Transfer from the date of lodgment for stamping, in five days.

[18] Even if I had concluded that the rescission was invalid, and the agreement was still on foot, the plaintiff did not adequately demonstrate that he was ready willing and able to settle by tendering the balance purchase price on the settlement date. In Fercometal –v- Mediterranean Shipping Co[2] the court held:

"When A wrongfully repudiates his contractual obligations in anticipation of the time for their performance, he presents the innocent party B with two choices. He may either affirm the contract by treating it as still in force or he may treat it as finally and conclusively discharged. There is no third choice, as a sort of via media, to affirm the contract and yet to be absolved from tendering further performance unless and until A gives reasonable notice that he is once again able and willing to perform. Such a choice would negate the contract being kept alive for the benefit of both parties and would deny the party who unsuccessfully sought to rescind, the right to take advantage of any supervening circumstance which would justify him in declining to complete".

[19] As stated in the preceding paragraphs, had I concluded that the 7 April 2005 letter was an invalid rescission and therefore a wrongful repudiation of the agreement, the plaintiff had two options. He could have accepted the wrongful repudiation thereby bringing the contract to an end and sue for damages or he could have declined to accept the repudiation and affirmed the continued existence of the agreement and sued for specific performance of it. In Fercometal Lord Ackner at page 799 paragraph (C) stated:

"When one party wrongly refuses to perform obligations, this will not automatically bring the contract to an end. The innocent party has an option. He may either accept the wrongful repudiation as determining the contract and sue for damages, or he may ignore or reject the attempt to determine the contract and affirm its continued existence".

[20] I have upheld the submission that in order to successfully obtain an order for
specific performance the plaintiff was not absolved from demonstrating that he was ready, willing and able to settle on the settlement date by tendering the purchase price. He was obliged to take steps to tender the balance purchase price because he had not accepted the wrongful repudiation (for the avoidance of doubt, which was denied by the defendant). In Bahramitash –v- Kumar[3] the Supreme Court of New Zealand held that it was for the purchaser to begin the process of settlement by taking or transmitting the settlement sum to the vendor. The court stated:

"A vendor’s settlement obligation, to convey the property, is interdependent with the purchaser’s obligation to pay in accordance with the contract. It is not an obligation to be performed in isolation. Therefore, ordinarily, a vendor will be in default in relation to that obligation only if the vendor has failed to settle when a proper tender of settlement has been made. In Foran –v- Wight, Deane J of the High Court of Australia described the position of the parties in relation to settlement:

"In the ordinary case of a contract for sale of land, the contractual obligations of the parties to complete the sale are concurrent and conditional in the sense that the vendor is not obliged to convey the land and the purchaser is not obliged to pay the purchase price otherwise than upon concurrent performance by the other party. Neither vendor nor purchaser will be guilty of breach of contract if he fails to complete within the time or upon the day fixed by the contract unless the other party tenders performance of his concurrent obligations."

It is however, for the purchaser to begin the process of settlement by taking or transmitting the settlement sum to the vendor – money goes to documents, as it is often put. Ordinarily, therefore, the vendor cannot be shown to have breached the contractual obligation to convey the property unless there has been a proper tender by the purchaser, and in response to that tender, the vendor has exhibited an inability or unwillingness to deliver the title and other documentation required in terms of the contract".[emphasis added].

[21] In not tendering the purchase price on the settlement date the plaintiff forfeited his
right to specific performance of the agreement. And in these circumstances the defendant cannot be shown to have breached the contractual obligation to convey the property given that there had not been a proper tender of the purchase price by the plaintiff. Moreover in the absence of the tender of the purchase price, the defendant cannot be shown to have exhibited an inability or unwillingness to deliver the Title and other documentation required in terms of the agreement. At the very best what can be gleaned from the plaintiff’s evidence is that he had a perception that the defendant could not settle. I am in agreement with Mr Young that that is not the criteria in any event. It is important to note that by 7 March 2005 the defendant was in receipt of the transfer and land sales declaration. This was after the 4 March 2005 settlement date. However I have upheld the submission that the plaintiff cannot complain about this because the defendant had 14 days to remedy the default and the plaintiff himself had not paid the stamp duty until 7 April 2005.

[22] There is not a shred of evidence establishing any indication from the defendant, by
words or conduct, that a contractually proper tender by the plaintiff would be futile. The significance of this is that had there been such an indication then the vendor could not treat the purchaser as being in default by failing to make such a tender. Secondly, the vendor will be taken to have indicated that he was not ready, willing and able in all material respects to perform his settlement obligations.[4] In any event the defendant has demonstrated that he was ready and able to settle. Significantly, ".....it was the duty of the purchaser to seek out the vendor on settlement date and to pay and satisfy the price"[5] There was no evidence whatsoever lead by the plaintiff that the plaintiff as purchaser did this.

[23] The evidence established that when Mr Parshotam sought an extension of time
to settle, he advised Mr Morgan that he did not consider his client would be able to settle on the date specified in the agreement because his client had not finalized finance arrangements and would not be able to have all matters in hand by 4 March 2005. Of significance, Mr Parshotam was not called to dispute Mr Morgan’s version of what transpired in discussions between them. There is also no credible evidence before the court that the plaintiff had funds in place either on 4 March, 24 March or 23 April 2005 (i.e. 30 days from 24 March 2005 in the event that the plaintiff had established and which he did not that the settlement date was extended to).

[24] I am constrained to say that the evidence relied on by the plaintiff to support his
contention that he had funds at the material time to settle is dubious at best. The letter of offer purportedly made on 31 March 2005 referred to by the Colonial Bank officer was not discovered by the plaintiff. The bank officer testified that there was no evidence that the sum of $150,000.00 was paid and there was no evidence that it was waived or was being sought to be waived. There was no evidence that the bank had appointed a solicitor to prepare the necessary documentation. The bank officer testified that it would have taken between two weeks, two months or six months to complete the documentation before drawdown on the loan could be made although there was one case which took less than two weeks. Of significance, the plaintiff himself did not discover any documentation showing that he had finance in place and was able to settle. On a best case scenario assuming that the bank would have sent Mr Parshotam instructions on 4 April 2005 (at the very earliest) and given that Mr Parshotam had "only resumed office" on 7 April 2005 (he was sick for 8 days before that date) and assuming that Mr Parshotam began preparation for documentation immediately on Monday morning which was 11 April 2005, and assuming that it would take only two weeks to complete the documents to enable a drawdown, this took the plaintiff to 25 April 2005. I agree with Mr Young that the plaintiff’s case is that he thought the settlement date was extended to 24 March 2005. Taking into account the 30 days thereafter that the purchaser was obligated, under the plaintiff’s own case, he had to settle by 23 April 2005. I concur with Mr Young that the plaintiff fails on his own version of the facts.

The counter-claim

[25] The defendant claimed that he was entitled to damages of $366,875.00 plus interest paid to ANZ Bank from May 2005 to date of payment at the rate of $2,100.00 per month based on loss of chance which was recognized as an item of damages by the Court of Appeal in Pacific Realtors (Fiji) Ltd –v- Mohammed Khairullah Khan & Others[6]. The premise for the counter claim for loss of chance was the agreement to sell the property to Mr Whittaker for $800,000.00 together with interest to ANZ Bank on the plaintiff’s loan because of the lodgment of the caveat by the plaintiff. The plaintiff subsequently obtained an order restraining any further dealings in respect of the property. The agreement with Mr Whittaker was subsequently rescinded because the defendant had been unable to secure the withdrawal of the caveat which was a condition of the agreement he had with Mr Whittaker. The agreement with Mr Whittaker was also subject to the following condition:

"Acceptance by Yogesh Chandra the caveator under the above caveat and the purchaser of the land under an agreement for sale and purchase that such contract for sale and purchase has been validly cancelled, terminated or rescinded by the vendor".

[26] In Pacific Realtors the court also recognized that what must also be considered were contingencies upon which any sale was dependant and if the sale turned on such a number of contingencies this made the calculation of any loss not only difficult but incapable of being carried out with precision. The first question is whether or not the action taken by the plaintiff was the cause of the rescission of the contract with Mr Whittaker.[7] Although I have serious reservations about the plaintiff’s conduct in caveating the property when he was clearly not entitled to such caveat, (the agreement having already been validly rescinded for his failure to perform), the contract with Mr Whittaker was made subject to the lapse, discharge or withdrawal of the caveat. The rescission of the contract with Mr Whittaker occurred because Mr Ward was unsuccessful in having the caveat discharged by 28 February 2006, Mr Chandra having obtained an order extending the caveat, and not because the plaintiff had caveated the property. Further in my view it was unlikely that the sale to Mr Whittaker would have concluded under the terms of the contract because it would have been virtually impossible to secure compliance of the condition that Mr Chandra accept that the agreement herein had been validly rescinded. This action in itself evidences the unlikelihood that Mr Chandra would have agreed to what was necessary to secure compliance with condition 24.1 (b) of the contract between the defendant and Mr Whittaker. Accordingly, the counter-claim based on the loss of chance to conclude the sale with Mr Whittaker must fail.

Conclusion

[27] The settlement date of 4 March 2005 was not validly extended in terms of what was prescribed in the agreement between the parties. There was an offer to extend to 24 March 2005 which was not acted upon entitling the defendant to rescind the agreement. The plaintiff failed to perform his part of the bargain stipulated by the terms of the agreement and accordingly his action fails. The counter-claim for compensation for loss of chance also fails.

Orders

(i) the plaintiff’s action is dismissed with costs to the defendant to be taxed if not agreed.

(ii) the counter-claim is dismissed.

G. Phillips
JUDGE

At Lautoka
6 June 2008

^[1] Chitty on Contracts (26 Edition) at para. 91
^[2] [1989] 1 A.C. 788 at 805 para (D)
^[3] [2005] NZSC 39; [2006] 1 NZLR 577 at 582
^[4]ibid at paragraph 18
^[5] Plowman –v- Dillon [1985] NZHC 183; [1985] 2 NZLR 312 at 327 line 27.
^[6] Vol. 23 FLR 103.
^[7] ibid page 107 C.