Between Chris Stephen Conolly Plaintiff/Defendant by Counterclaim v Kadieshandirebanks Defendant/Plaintiff by Counterclaim
| Jurisdiction | Cayman Islands |
| Judge | Mme Justice Margaret Ramsay-Hale |
| Judgment Date | 17 November 2021 |
| Court | Grand Court (Cayman Islands) |
| Docket Number | G 63 of 2019 |
Hon. Mme Justice Margaret Ramsay-Hale
G 63 of 2019
IN THE GRAND COURT OF THE CAYMAN ISLANDS
CIVIL DIVISION
Contract Law — Agreement for Sale and purchase of land — notice making time of the essence of the contract — rescission of contract — liquidated damages clause — repudiatory beach by vendor — when remedy of specific performance available
Plaintiff/Defendant by Counterclaim, in person
Ms. Amelia Fosuhene of Brady Law for the Defendant /Plaintiff by Counterclaim
On 15 April 2016 the Plaintiff, Chris Stephen Conolly, (“Mr Conolly”), as purchaser, and the Defendant, Kadie Shandi R Ebanks (“Ms Ebanks”) as vendor, executed a sale and purchase agreement (“the Agreement”) in respect of land situate in Lariat Road, Frank Sound, Grand Cayman, registered as Block 59A Parcel number 174, Block 59A (the “Land”) to be purchased via a loan and repayment scheme of regular instalments.
This application arises from a dispute over a missed or late payment of an instalment, resulting in Ms. Ebanks taking the decision to notify Mr. Conolly by letter dated 28 February 2019 that he was in arrears and that all arrears then in the sum of $13,467.50 had to be paid by 28 March 2019 or the contract would be terminated.
Mr. Conolly claims against Ms Ebanks in breach of contract and seeks an order for specific performance to compel her to perform her obligations under the Agreement.
The proceedings were commenced on 25 April 2019 when Mr. Conolly filed an ex parte Originating Summons seeking an order for Specific Performance on the part of the Defendant in respect of the Agreement, plus costs. Their case is summarized in paragraph 15 of their summons as follows:
“It is submitted that the Defendant is acting unreasonably in citing breach of contract where none exists, and attempts to breach the Sale Agreement themselves in attempting to keep the funds paid to them, seize back the land and dispose of the family home, animals and other property on the land. The reasonable course of action is to either continue with the contract or complete the sale on the land, as suggested by the Plaintiffs in March 2019, and as questioned by the Defendant via email. It is the Plaintiffs' opinion that the Defendant is now aware of the value of the land since signing the Sale Agreement, and wishes to seize the land to re-sell as a higher price.”
Mr. Conolly case is that he has paid over $30,000 KYD under the Agreement thus far, with $55,000 owing in order to complete. In addition, he says he has spent a further $115,000 in surveying costs for clearing the land, filling the land, having a deep well dug, building a long driveway of over 250 feet, obtaining architects plans for a home, building a stable for animals and have started a plantation and applied for city water supply and electricity in readiness for moving onto the property. He contends that that the action by Ms. Ebanks to terminate the contract is unreasonable and that he has an equitable interest in the Land and should be allowed to complete the purchase.
Although Mr. Conolly is the Plaintiff of record as the signatory to the Agreement, his wife, Joanne Conolly (“Mrs. Conolly”) acted at all times on his behalf. It was Mrs. Conolly who reached out to Ms Ebanks to inquire about the Land that she had advertised for sale. Mrs. Conolly who later conducted the negotiations for the sale and purchase of the Land and prepared the agreement for sale (and subsequently notarised it). Mrs. Conolly who made all the payments which were made under the Agreement and was the only person with whom Ms Ebanks had any contact after the agreement was made despite Mr. Conolly being the other contracting party.
Mrs. Conolly prepared and signed the originating application which commenced these proceedings and was the sole witness of fact for Mr. Conolly.
Ms. Ebanks filed an affidavit in response setting out allegations of breach of contract and upon taking her own legal advice, subsequently filed a Defence and Counterclaim. The extracts set out below describe the areas of dispute:
“14 ….The Contract has been breached because the Plaintiff was consistently in arrears since the commencement of the contract. At no point has the Plaintiff brought the arrears up to date. The Defendant did all she could to work with the Plaintiff over the 3 years for which the contract existed. However, the Defendant had to make payments herself to ensure her land was not repossessed due to the late payments by the Plaintiff”
“15. The Plaintiff has further breached the contract by using the land to house farm animals. There has been no approval for animals on the land. The Plaintiff has also breached the contract by building on the land prior to transfer and without the proper planning permissions. There is a small structure on the property erected by the Plaintiff for which there was no planning permission.”
“22. The Defendant duly served notice in accordance with section 9 of the contract. The Defendant terminated the contract due to the Plaintiff's continuous breaches. The Plaintiff made no reasonable attempt to remedy the breaches whilst the contract was live. Since March 2019 the Plaintiff has made no payment whatsoever into the account of the Defendant. …The Defendant was forced to make good on the land mortgage thought (sic) her own wages due to the Plaintiff's behaviour.”
“24. Despite the Plaintiff being in breach of the contract, making no payment since March 2019 and the Defendant rescinding the contract, the Plaintiff continued to treat the land as his own. The Plaintiff has trespassed on the property and has continued working on the land despite the Defendant's repeated requests that the Plaintiff vacate the property and cease and desist from using the land.”
Ms. Ebanks seeks Damages, Interest, a Declaration that the contract is rescinded, and other relief.
Mr. Conolly retained Counsel and on 1 February 2021, Mr. Conolly who was then represented by Counsel filed a Reply to Defence and Defence to Counterclaim. In the Reply, Mr. Conolly denied being in breach of the Agreement and stated that he has been and is willing and able to complete the sale of the Land in full. He averred in his Defence to the Counterclaim that Ms Ebanks had prematurely and prejudicially rescinded the contract when he was not in breach and that he had the funds in the bank to make full payment to Ms Ebanks.
The issues that arise for resolution in this matter are
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(i) Whether the Agreement was properly terminated by Ms Ebanks;
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(ii) If the contract was properly terminated, to what relief is Ms Ebanks entitled;
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(iii) If the Court finds that the Agreement was not properly terminated, and that Ms Ebanks was in repudiatory breach of the Agreement, then the issue is whether Mr. Conolly is entitled to an order for specific performance.
The resolution of the issues in this case turns on the construction of the Agreement made between the parties. A purchase price of $87,000 was offered and accepted which was to be paid via a loan and repayment scheme of regular instalments as set out below:
“IT IS HEREBY AGREED that the Vendor of the First Part shall sell and the Purchaser of the Second Part shall Purchase the absolute unencumbered title to the said Property for the Price of $87,000 (eighty seven thousand dollars) loaned to the Purchaser by the Vendor, on the terms and conditions set forth herein and, as the context admits or requires, the following terms shall have the following respective meanings when used in this Agreement (including the T&C Schedule):
a. ‘property’ means registered parcel 174 of block 59A in the Midland East registration section of the Cayman Islands, purchased by the Purchaser, caution to be registered against the property in the names of Joanne Conolly and Chris Stephen Conolly, and this Agreement to be stamped and registered with Lands. Stamp duty to be paid for by the Purchaser.
b. ‘Price’ means the sum of $87,000 being the total purchase price for the Property;
c. ‘Interest Rate’ means interest accruing at the rate of 5.00 percent over the term of the loan.
d. ‘Deposit’ means the sum of CI$2,000 payable upon the execution of this Agreement.
e. ‘instalments’ means the sum of $1,288.75 payable on or before the last day of each calendar month starting two months from the date of this Agreement and continuing to be paid on or before that day on each successive month until the total amount of the Balance (along with interest accrued at the interest rate on the balance of the Price outstanding from time to time) has been paid in full with amount of the last of such payment being adjusted accordingly if necessary.”
The Agreement also contained a Schedule of General Terms and Conditions dealing with detailed arrangements such as ‘Payments’, ‘Accounting for Payments’, ‘Rescission Upon Default by Purchaser’, ‘Commission’, ‘Completion’, ‘Interest’ and so on.
Ms Ebanks had a mortgage on the Land which was secured by a Charge. The existence of the Charge is acknowledged in Clause 10 dealing with Completion. The clause provides for the Charge to be satisfied and removed by the Vendor, prior to the last instalment being made, allowing for the transfer of the Land free from all encumbrances to the Purchaser on completion.
Sections 7 and 9 are the ones that fall to be construed in these proceedings. They provide as follows:
“7. Payments. Upon entering into this Agreement, the Purchaser shall make all payments hereunder (including the instalments in accordance the (sic) Payment Schedule) to the Vendor direct. Payments hereunder are to be credited as and when received by or on...
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