Nicholas et Al v Bank of Nova Scotia

• Jurisdiction: British Virgin Islands
• Court: Court of Appeal (British Virgin Islands)
• Judge: Redhead, J.A.
• Judgment Date: 24 January 2000
• Neutral Citation: VG 2000 CA 2
• Docket Number: Civil Appeal No. 11 of 1999
• Date: 24 January 2000

Court of Appeal

Singh, J.A. Redhead, J.A. Matthew, J.A.

Civil Appeal No. 11 of 1999

Nicholas et al

and

Bank of Nova Scotia

Appearances:

Mr. S. Bennett for the appellants

Mr. E Sandy with him

Mr. Gerard Farara, Q.C. for the respondent

Miss T. Small with him

Contract for sale - Breach of condition/ warranty — Appellants entered into contract for sale of house with respondent — Purchase price agreed and respondent paid deposit pending completion of sale — Clause 5 of agreement warranted that there were no existing material structural defects to the property conditional upon the obtaining of a survey report by the purchaser within 30 days — Report indicated structural defects and respondent sought and obtained declaration of right to terminate agreement and order for refund of deposit — Appellants appealed — Appeal dismissed.

Redhead, J.A.

1 The appellant, Dimitri Nicholas and the respondent, on 6 ^th May, 1996 entered into a contract for the sale of a house whereby the appellant agreed to sell and the respondent agreed to buy 1.25 acres of land and a dwelling house thereon, collectively described as the property. The purchase price of the property was agreed between the parties at $750,000 in United States Currency.

2 In pursuance of this agreement the respondent, as the purchaser, paid a deposit of $75,004 c/o Smiths Gore Overseas Limited as stakeholder pending completion of the sale.

3 Clause 5 of the agreement provides as follows:

“The vendor warrants that there are no existing material structural defects to the property and this agreement is conditional upon the purchaser obtaining a structural survey report stating that no material structural defects exist with regard to the dwelling-house on the property within 30 days from the date hereof. In the event that the purchaser does not exercise its right to rescind the agreement and notifies the same to the vendor or their agents Smith Gore Overseas Limited within the said 30 days the purchaser shall ‘be deemed to have accepted the survey report or waived its right to obtain one. The costs of the survey and report shall be borne by the purchaser.”

4 The respondent pursuant to clause 5 of the agreement obtained a report, from Robert Wells Chartered Engineer. In this report he says, inter alia:–

There are various obvious defects that collectively indicate inferior workmanship more so when bearing in mind that the structure is relatively new. These defects are as follows:–

• 1. Most of the tiling on the deck has lost its bond. Although this is not a structural defect per se in this instance the resulting loss of weather proofing will accelerate deterioration of the deck slab

• 2. The apartment entrance lobby on the south side is separating noticeably from the main body of the substructure

• 3. The apartment external wall on the east side is separating slightly from the deck slab above.

• 4. In one plaster on the east side substantial corrosion of reinforcement is falling off the concrete at the comers.

• 5. On the east and north sides there is extensive seepage through the pool walls which seems attributable to voids in the concrete and improperly plugged snapties. Also there is some incidental staining from corrosion.

• 6. Also on the east and north sides there is extensive cracking in the undersides of the deck slab. Approximately half of these cracks are characteristic of drying shrinkage and some show moisture penetration, which infers that the crack is deep.”

5 Having regard to the report the respondent, in reliance, on clause 5 of the agreement refused to complete the purchase.

6 On 17 ^th June, 1996 the respondent's solicitors wrote to the appellants' solicitors. The final paragraph of that letter is in the following terms:

“We hereby give notice on behalf of our client that our client is terminating the agreement dated 6 ^th May, 1996 pursuant to clause 5 thereof. By copy of this letter, we ask Smiths Gore Overseas Limited to return forthwith the deposit of$75,000 which it holds as stakeholder.”

7 The parties were unable to agree, whether having regard to the report of the engineer, that entitled the respondent to rescind the contract in accordance with clause 5 of the agreement.

8 An originating summons was filed on behalf of the respondent on 18 ^th September, 1996. The principal issue upon which the court was called upon to make a determination as contained in paragraph 1 of the originating summons was:–

“(1) a declaration that pursuant to the terms of agreement for sale made 6 ^th May, 1996 between the defendant, as vendor and the plaintiff as purchaser, the preconditions necessary for the plaintiff to complete the defendant's real property…..in particular, the precondition stipulated in clause 5 of the said agreement for sale, had not been satisfied in light of the written report of Mr. Robert Wells

Structural Engineer obtained on or about June 5th, 1996 and that therefore the plaintiff was entitled to terminate or rescind the said agreement and demand and receive a refund of the $75,000 deposit paid thereunder together...