1. Neil Purton 2. Michelle Purton Plaintiffs v 1. David Holden 2. Michelle Holden Defendants
|Mr Justice Alastair Walters
|17 December 2021
|Grand Court (Cayman Islands)
|G 88 of 2020
Hon. Mr Justice Alastair Walters (Actg.)
G 88 of 2020
IN THE GRAND COURT OF THE CAYMAN ISLANDS
Breach of contract, illegality, Development and Planning Act, implied terms
Mr James Kennedy of KSG for the Plaintiffs and
Mr Anthony Akiwumi of Etienne Blake for the Defendants
This matter relates to a dispute between the Plaintiffs and Defendants over an agreement based on an offer to purchase real estate dated 29 May 2017 (the “Contract”). The Defendants offered to purchase from the Plaintiffs a house situated on Galway Quay in Crystal Harbour, Grand Cayman and registered with the Cayman Islands Land Registry as West Bay Beach North, Block 17A Parcel 47 (the “Property”). The offer was accepted by the Plaintiffs on the same date. The sale and purchase was completed on 31 July 2017.
The Contract not only provided for the sale and purchase of the Property but also provided that the Plaintiffs would, at their expense, carry out some building works (the “ Additional Works”, as defined below) to the Property for the benefit of the Defendants. Some of the Additional Works were to be completed prior to the sale completing and some to be completed afterwards. A sum of US$315,000 (the “Retention”) was retained from the purchase price for the Property in respect of the cost of the Additional Works and was held by the Defendants' attorney pending satisfactory completion of the Additional Works. It is in relation to that part of the Contract that the dispute has arisen.
Of the parties, only Mr Purton and Mr Holden, the First Plaintiff and First Defendant respectively, have seemed to play an active part in the proceedings and they were the only lay witnesses to give evidence at trial.
I should say at this point that I believe that this is a case that was eminently suitable for resolution by way of mediation. When I asked counsel for the parties at the start of the trial whether there had been any attempts to mediate, they said that there had not. That, I believe was a missed opportunity.
The proceedings were commenced by way of a Writ and Statement of Claim issued on 28 May 2020. As mentioned above, the Additional Works included some minor works to the Property to be carried out prior to the sale completing. Those were installation of automated entrance gates, construction of a wall and side gate and filling and repairing any holes or damage caused by the Plaintiffs when moving out along with redecorating (the “Pre-Completion Additional Works”). These were carried out by the Plaintiffs prior to completion.
The remainder of the Additional Works involved the construction of a 3 car carport (the “Carport”) and an extension of the master bedroom (the “Master Bedroom Extension”). In the Contract, US$65,000 of the Retention was expressly stated to be attributable to the cost of the Carport and US$250,000 to the cost of the Master Bedroom Extension. No part of the Retention was expressed to be attributed to the Pre-Completion Additional Works, although that does not necessarily mean that the parties either expected that those works would be carried out for free or that they were to be paid for out of the balance of the purchase price as opposed to the Retention.
Both the Carport and Master Bedroom Extension required planning permission and building approval prior to being started. This is a two stage process with separate applications being made to the Central Planning Authority (“CPA”) for planning permission and, subsequent to planning approval being granted, to the Building Control Unit (“BCU”) for building approval. The planning approval process is governed by the Development and Planning Act (2021 Revision).
On 19 July 2017 Mr Purton applied for planning permission in relation to the Master Bedroom Extension. Planning permission was granted on 13 September 2017 and in November 2017 plans for the Master Bedroom Extension were submitted to the BCU. BCU approval was granted on 8 May 2018. In April 2018, the Defendants indicated that they wished to delay the works to the Master Bedroom Extension until 1 September 2018. By 1 August 2018 they had decided not to proceed with the Master Bedroom Extension. On 1 September 2018 the Defendants indicated through their attorney that they no longer wished to proceed with those works.
In April 2018 Mr Purton started construction of the Carport without obtaining the requisite planning permission or building approval and concealed the lack of permission and approval from the Defendants. The Carport was substantially completed by the third week of June 2018. Mr Purton attended to a number of extra finishing works requested by the Defendants and on 25 July 2018 requested payment for that part of the Additional Works. In September 2018, when the Defendants discovered that the Carport had been built without planning permission Mr Purton was, by agreement, given the opportunity to apply for planning permission and BCU approval after the fact (“ATF Approval”) with payment for the Carport deferred until that had been granted. ATF Approval was ultimately granted but the question of payment for the Carport got subsumed into an argument between the Plaintiffs and Defendants about the boundary lines for the Property.
None of the Additional Works have been paid for and the retention of US$315,000 was released back to the Defendants by their attorney.
In summary, the Plaintiffs' claim is for damages for breach of contract being US$65,000 in respect of the Carport on the basis that ATF Approval was obtained and US$250,000 in respect of the Master Bedroom Extension on the basis that by failing to allow the Plaintiffs to complete the relevant work the Defendants prevented them from receiving the US$250,000 and thereby also getting paid for the Pre-Completion Additional Works.
The Defendants served a Defence and Counterclaim on 25 June 2020. The main grounds relied on by the Defendants by way of defence are as follows:
12.1 obtaining planning permission and BCU Approval was a condition precedent to starting the Carport and Master Bedroom Extension;
12.2 the Plaintiffs owed the Defendants a duty of integrity/good faith;
12.3 the Plaintiffs were obliged to complete the Pre-Completion Additional Works in accordance with the Plans and Specifications (as defined in the Contract) and that it was a condition precedent to the works that the Plaintiff would take all reasonable care not to encroach on property outside the boundary of the Property;
12.4 it was an implied condition of the Contract that time was of the essence for completion of the Additional Works and the Plaintiffs failed to comply with this condition, and, in the case of the Carport, built an illegal structure;
12.5 the Plaintiffs misled the Defendants in relation to the question of planning permission for the Carport and the Defendants had relied on the Plaintiffs representations to that effect;
12.6 the Plaintiffs' fraudulent representations provide the basis for the Defendants' claim that the contract was rescinded;
12.7 and/or that the Plaintiffs breached a duty of good faith in the performance of the Additional Works;
12.8 the Plaintiffs conduct was illegal and allows the Defendants to rely on the legal principle of “ ex turpi causa non oritur actio” (a plaintiff cannot pursue a claim for damages if it arises in connection with his own illegal conduct or wrongdoing);
12.9 the Carport could not have been completed on 3 August 2018 because it was an illegal structure;
12.10 the Plaintiffs were in repudiatory breach of the Contract; and,
12.11 the Defendants were entitled to rely on the Plaintiffs' delays, breaches, misrepresentations, breached of their obligation of good faith/integrity when deciding not to proceed with the Master Bedroom Extension.
By way of counterclaim, the Defendants claim that the Carport was defectively constructed, is incorrectly placed on the Property, that the entrance to the Property itself is on adjoining land which the Plaintiffs did not own and that the National Roads Authority (“NRA”) would not sanction a reparcellation or re-drawing of the boundaries to the Property because to do so would inhibit access to the Property and adjoining properties.
As a result, it is claimed that the Defendants have suffered loss which requires them by way of mitigation to regularize the boundary of the Property and re-construct the entrance to the Property requiring the removal of the Carport. Anticipated costs were stated to be CI$125,000 (paragraph 25 of the Counterclaim).
The Defendants also claim that because of the matters set out in their Counterclaim, including defective title and encroachment, the value of the Property was less that the price agreed to be paid in the Contract. They claim damages based on an alleged loss in value of the Property, the loss of opportunity for sale because of the matters pleaded in their Defence and a right to set off the anticipated costs of CI$125,000 (paragraphs 26 and 27 of the Counterclaim).
A relatively short Reply and Defence to Counterclaim dated 13 July 2021 was served on behalf of the Plaintiffs:
16.1 admitting that planning permission and BCU approval was required in respect of the relevant Additional Works but denying that it was a condition precedent;
16.2 denying that a duty of integrity/good faith was owed;
16.3 averring that the Plaintiff was obliged to construct the automated gate in accordance with the Plans and Specifications and that the gate posts and relevant section of wall were already built before the gate was installed;
16.4 denying that time was of the essence and that the Carport was substantially complete within 10 weeks;
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