Bhojwani et Al v Punjabi et Al
| Jurisdiction | Belize |
| Judge | Legall, J. |
| Judgment Date | 21 January 2010 |
| Court | Supreme Court (Belize) |
| Docket Number | 774 of 2008 |
| Date | 21 January 2010 |
Supreme Court
Legall, J.
774 of 2008
Mrs. Liesje Barrow-Chung for the claimants.
Dr. Elson Kaseke for the defendants.
Contract - Oral agreement for purchase and development of property — First claimant to secure financing — Failure to secure financing — Written agreement not implemented due to failure to secure financing — Property sold to third party — Whether breach by defendant — Whether defendant purchasing property themselves through third party — Claimant not proving on balance of probability that defendant breached oral agreement — Claim dismissed.
This is a claim by the claimants against the defendants for breach of an oral agreement made in December, 2007 by the claimants and the defendants. It is important to quote the relevant parts of the claim so that the nature of the claim can be fully appreciated at the outset. The claim form states that the claimants are claiming damages for “breach of a joint venture agreement made Orally in December, 2007 between the claimants and defendants whereby it was agreed that the claimants and defendants would in partnership, purchase all that piece or parcel of land being Parcel No. 27 Block 1 in Santa Elena Registration Section and develop the property.” (emphasis mine) The purchase of the property is one of the terms of the oral agreement. This claim is not a specific claim for breach of a written contract made on 17th January, 2008 for the purchase of the property.
The facts that form the basis of the claim ought to be stated. By a lease dated 20th December, 2008, between a limited liability company registered in Belize, named Joint Ventures Limited, (JVL) and Arsenio Witz of Punta Gorda, Belize, the company became tenant of the property situated at Parcel No. 27 Block 1 Santa Elena Registration Section, Corozal Belize (the property). Arsenio Witz, the owner of the property, signed the lease on his own behalf, and James Gegg, General Manager of the company signed for the company. All the defendants were directors and shareholders of the company.
The period of the lease was for twelve years from the date of the lease. Clause 2 of the lease states that if the tenant (the company) is desirous of purchasing the property, the tenant should give not less than two months notice in writing of its desire, to the owner of the property, not later than the expiration date of the lease; and the owner upon the notice and upon payment of an agreed purchase price shall convey the property to the tenant (option to purchase).
The claimants — husband and wife — who are normally resident in Miami, Florida, U.S.A., claim that they made in December, 2007 an oral agreement with the defendants, who had control of JVL, to purchase the property and develop it by constructing a shopping plaza thereon, and to rent out stores and stalls located in the plaza. The claimants contend that by making that oral agreement the defendants impliedly agreed not to cause JVL to exercise its option to purchase the property. It was also orally agreed, according to the claimants, that profits derived from the development and establishment of the shopping plaza, would be divided equally between the claimants and the defendants — the claimants 50% and the defendants 50%. A new company would also be established, says the claimants, the shares in which would be divided equally — the claimants 50% and the defendants 50%. Evidence in support of the claimants claim of the oral agreement comes from the No. 3 defendant, who in his first witness statement at paragraph 10 states:
“10. It was clearly understood by Hansraj Bhojwani and the defendants that as a financial partner to JVL, Hansraj Bhojwani would get a loan from a bank or financial institution to purchase the property and to construct a shopping plaza thereon, and that a company limited by shares would also be incorporated with Hansraj Bhojwani and his wife Nandini Bhojwani and all the defendants holding shares; the Bhojwanis holding 50% of the shares and the Punjabis holding 50% of the shares.”
In pursuance of the oral agreement to purchase the property and develop it by constructing a shopping plaza thereon, the No. 1 claimant and No. 3 defendant made a written agreement dated 17th January, 2008 with Arsenio Witz, the owner of the property, to purchase the property for $3,500,000 BZ. The No. 1 claimant and the No. 3 defendant made a deposit of $10,000 BZ each to Arsenio Witz towards the purchase price of the property.
The written agreement describes the purchasers as the No. 1 claimant and No. 3 defendant “or their duly nominated company,” to use the words of the agreement. There is no evidence as to the specific identity of the duly nominated company, and the No. 1 claimant stated frankly in cross-examination that he did not know the nominee company referred to in the agreement. Since the identity of the nominee company was not specifically disclosed by the evidence, I consider that the identified parties to the written agreement were the No. 1 claimant and the No. 3 defendant. This is consistent with the evidence of the No. 1 claimant who said in cross-examination that the parties to the agreement were him and the No. 3 defendant.
The written agreement of 17th January, 2008 clearly states the parties thereto and the No. 2 claimant and the numbers 1, 2 & 4 defendants' names do not appear therein. But I think the intention of the claimants and the defendants was that the written agreement to purchase the property, was to be executed by the parties who did in fact execute the agreement; and that the property itself, once acquired, would be used, in accordance with the oral agreement. Paragraph 18 of the No. 3 defendant's witness statement indicates that the No. 1 claimant and No. 3 defendant were a front for the acquisition of the property:–
“18 In order not to slow down work, both Hansraj Bhojwani and the defendants agreed that Hansraj Bhojwani and myself would front in equal halves all start-up money and petty expenses like legal fees, costs of demolition of buildings on the property site, costs of valuation of the property, and so on and later that money would be reimbursed to us from the loan which was to be obtained by Hansraj Bhojwani for the property.”
It is well settled that the doctrine of privity of contract provides that “persons not a party to a contract could not sue and be sued” under that contract: see Capital Insurance Ltd. v. Guichand (2005) 67 W.I.R. 321 at page 328, per Sharma, C.J. The named parties to the written agreement dated 17th January, 2008 were the No. 1 claimant and the No. 3 defendant, so that only they could sue or be sued under the written agreement, though the claim in this case is with respect to the oral agreement. In that written agreement, it was not stated that the said parties were acting as agents for the No. 2 claimant and the other defendants, or that they were acting on behalf of the No. 2 claimant or the other defendants. If it was the intention, that the No. 1 claimant and the No. 3 defendant were to so act, then they could have easily inserted that in the written agreement. They did not do so; and in my judgment, it was not intended that they should so act.
But, on the evidence above, I am of the view that it was the intention of the claimants and the defendants, that the No. 1 claimant and the No. 3 defendant would sign and be the parties to the written agreement of sale; after which a new company would be established to take title for the property. In that company, all the claimants and the defendants would take assigned number of shares, and share in the profits of the project.
On the 11th February, 2008, in accordance with the oral agreement, a new private company limited by shares, named Venus Towers Limited, was incorporated in Belize with registered offices at Commercial Free Zone, Santa Elena, Corozal District, Belize. The share capital of the new company was $10,000, divided into 10,000 shares of $1.00 each. The 10,000 shares in the company were taken as follows:
No. 1 claimant - 2500 shares
No. 2 claimant - 2500 shares
Nos. 1, 2, 3 & 4 defendants - 1250 shares each
The objects of the new company were wide enough to include the establishment of a shopping plaza. The objects include the right to purchase, sell, and develop lands in Belize and to establish shops and stores and to purchase and sell articles and goods of every description. The cost of incorporation of the new company was paid equally by the No. 1 claimant and No. 3 defendant.
On the property there were buildings; and the parties decided to demolish the buildings and to commence construction of the foundation for the new shopping plaza. The No. 1 claimant retained on behalf of the new company, Venus Towers Limited, a construction company named Hoare Free Zone Construction Limited to undertake the demolition and construction. The No. 1 claimant and the No. 3 defendant paid to the construction company about $113,000 BZ towards the demolition and construction costs of the shopping plaza, each paying half of the amount. The said parties also paid $1650.00 BZ each to Mitchell Moody, valuators, as the cost for valuation of the property. I also believe that the claimants paid $7,500 BZ as half of the brokerage fees for the purchase of the property, and the No. 3 defendant paid the other half These expenses would be repaid by monies generated by the new company as the No. 3 defendant states in paragraph 12 of his witness statement as follows:
“12 The monies realised by the new company from the rental of shops within the newly constructed shopping plaza would be used first to pay off the loan which Hansraj Bhojwani would have obtained from the bank or financial institution and other upfront capital which the...
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