Village Cay Marina Ltd Appellant v John Acland Landac Development Ltd Rhyto Investments Ltd John Greenwood Barclays Bank Plc Respondents
| Jurisdiction | British Virgin Islands |
| Judge | SIR VINCENT FLOISSAC, C.J. |
| Judgment Date | 13 May 1996 |
| Neutral Citation | VG 1996 CA 2,VG 1996 CA 3,[1996] ECSC J0513-4 |
| Court | Court of Appeal (British Virgin Islands) |
| Docket Number | CIVIL APPEAL No. 8 of 1995 |
| Date | 13 May 1996 |
IN THE COURT OF APPEAL
The Rt. Hon. Sir Vincent Floissac Chief Justice of Appeal
The Hon. Mr. C.M. Dennis Byron Justice of Appeal
The Hon. Mr. Satrohan Singh Justice of Appeal
CIVIL APPEAL No. 8 of 1995
and
Dr. Fenton Ramsahoye Q.C. and Mr. G. St.C. Farara for the Appellant
Mr. J.S. Archibald Q.C., Mr. S. Bennett and Mr. A. Blackman for the Respondents
Mr. R. Webster and Mr. P. Dennis for the Third Party.
At all material times, the appellant (Village Cay Marina Limited or VCM) was the registered proprietor of a long lease from the Crown of a parcel of land (Parcel 34/1) situate at Wickhams Cay 1 in Tortola and registered as a parcel of Block 2937B of the Road Town Registration Section. Parcel 34/1 (which is also known as Plots 53 A and 53 B) is adjacent to the appellant's marina and its proposed development is metaphorically the soil wherein the 12 seeds of the disputes in this case were sown.
The first seed was sown on 9th November 1988 when the appellant issued and registered a debenture (the Debenture) in favour of the Third Party (Barclays). Under the Debenture, the appellant granted to Barclays a first fixed charge on its fixed assets and a floating charge on its other properties. The Debenture prescribed the events upon the happening of which the moneys secured by the Debenture immediately became payable and authorised Barclays, in those events, to appoint a Receiver and Manager with authority to perform certain acts as agent for the appellant.
The second seed was sown on 29th November 1988 when the first respondent (Acland) and Clifford Plaisance (who was then the major shareholder and a director of the appellant) executed an agreement which is herein conveniently referred to as the Parental Agreement. The evident object of the Parental Agreement was the development of the appellant's Parcel 34/1 by the construction of dwelling units thereon. The development was required to be effected by a company the shareholders of which would be Acland and Clifford Plaisance. The second respondent (Landac) was the company subsequently incorporated for that purpose on 8th March 1989.
Under the terms of the Parental Agreement, Acland was required to grant to the company (Landac) a loan in the sum of $150,000.00 "for the purpose of financing start-up costs, such sum to be repaid by the company primarily out of the proceeds of sale of units comprised in the development". The Parental Agreement also provided for the allotment of the shares in the capital of the company and for the appointment of the officers of the company. Acland would be allotted 51% of the shares and would be appointed sole director. Clifford Plaisance would be allotted 49% of the shares and would be appointed secretary.
Clause 5 of the Parental Agreement provided (inter alia) as follows:
"Plaisance shall arrange for the above-mentioned Plots 53A and 53B to be made available to the company for purposes of carrying out the development. and shall further arrange for Village Cay Marina Limited, either for no consideration or for a nominal consideration only as the company may think fit, as lessee under a Crown Lease of the said Plots, to enter into an option agreement with the company providing for the sale to the company or to its nominees as described below, of subleases of the said Plots or subdivisions thereof, such contract to be completed within five years from the commencement of work in connection with the development……..The said option agreement shall provide for the Plots or subdivisions thereof to be transferred to the Company for no consideration or to its nominees for such monetary consideration as may be required by the company provided that Plaisance shall ensure that the company and not Village Cay Marina Limited shall receive the whole of any such monetary consideration…….."
Clause 6 of the Parental Agreement provided as follows:
"This agreement is conditional upon an agreement being reached with Barclays Bank as mortgagee of Plots 53A and 53B whereby Barclays Banic shall agree not to enforce against Plots 53A and 53B any rights it may have arising out of the default of Village Cay Marina Limited and not to enforce against the land charged to Barclays Bank adjacent to Plots 53A and 53B any rights it may have arising out of the default of the company, such agreement to be in terms acceptable to Acland."
The third seed was sown on 1 7th January 1989 when the appellant's and Acland's solicitor (Richards Parsons) wrote a letter to the Manager of Barclays and therein suggested that Parce 1 34/1 be withdrawn from the purview of the Debenture upon payment to Barclays of the sum of $150,000.00. The penultimate paragraph of the letter reads:
"The Bank at present holds a debenture over VCM's property, but no land charge over Parcel 34/1, being the parcel on which the development is planned to take place. As we discussed yesterday, it is necessary for the protection of Landac that its obligations to the bank be "compartmentalized". It is suggested therefore that the Bank and VCM execute a document excluding Parcel 34/1 from the terms of the debenture, the consideration being the payment of the $150,000 to reduce VCM's debt to the Banic. VCM would then execute a land charge over the parcel solely to secure Landac's borrowing. The documentation would be authorised by resolutions of the shareholder and sole director of VCM."
The fourth seed was sown on 29th May 1989 when Landac issued a cheque (the controversial cheque) in favour of the appellant in the sum of $150,000.00. On that cheque was inscribed the ambiguous words "as per agreements". These words have generated a dispute as to the object of the controversial cheque.
Acland and Landac contend that the controversial cheque relates to an oral agreement (the Oral Option Agreement) entered into between the appellant (represented by Clifford Plaisance) and Landac on the same day (29th May 1989). Acland testified that under the Oral Option Agreement, the appellant granted to Landac or its nominees an option to purchase subleases of Parcel 34/1 or subdivisions thereof at the price of $1.00 each. According to Acland, the controversial cheque represented the agreed market value of Parcel 34/1 and was intended to be the consideration for the grant of that option.
The appellant contends that the controversial cheque relates to clause 6 of the Parental Agreement and the letter dated 17th January 1989 from Acland's solicitor to the Manager of Barclays. According to the appellant, the controversial cheque was intended to be the consideration for the withdrawal of Parcel 34/1 from the purview of the Debenture.
The fifth seed was sown on 10th July 1989 when the appellant specifically charged Parcel 34/1 to Barclays to secure the payment of "all monies and liabilities hereby agreed to be paid or discharged by the Chargor, including an initial facility in the sum of Seven hundred and sixty dollars ($760.000) with interest at the rate from time to time charged by the Bank (hereinafter called "the mortgage debt") repayable on demand." The appellant adduced this specific charge as evidence of the withdrawal of Parcel 34/1 from the Debenture.
The sixth seed was sown on 16th May 1990 when a writ of fieri facias was issued against the properties of the appellant in satisfaction of a judgment in favour of Dougal Thornton in suit No.84 of 1989. This writ has aroused a debate as to whether its issue is a valid ground for the appointment of a Receiver and Manager of the properties charged under the Debenture.
The seventh seed was sown after the sudden death of Clifford Plaisance on 19th January 1990. It was sown on 29th June 1990 when the appellant (represented by Kim Plaisance) and Landac entered into a written agreement (the Written Ratification) "hereunder in consideration of the sum of $ 150,000.00 paid by Landac to the appellant and receipt whereof the appellant thereby acknowledged, the appellant granted to Landac an option to purchase sub-leases of portions of Parcel 34/1 at the price of $1.00 and consented to the registration of the agreement as a "caution against the title of Parcel 34/1". Acland and Landac contend that the Written Ratification is written ratification of the Oral Option Agreement and the option allegedly granted thereunder. The appellant disavows the authority of Kim Plaisance to have executed the Written Ratification on behalf of the appellant and contests the validity of the Written Ratification on this and other grounds.
The eighth seed was sown on 24th September 1990 when Barclays wrote to the appellant in these terms:
"We write to advise you that the overdraft outstanding on the company account as at the close of business on September 21, 1990 was $782,647.50 debit.
As you are aware, this overdraft has been allowed pending drawdown on a second loan of $750,000.00 previously agreed by us.The purpose of this letter therefore is to demand a minimum sum of $32,647.50 which has to be deposited within 24 hours to bring your account back into order. In addition, we would remind you of further interest due at the month end, and this should also be taken into account.
Failure to comply with this request will result in the Bank taking whatever action it deems necessary to protect its position."
This letter raises the question as to whether Barclays had thereby waived its contractual right to appoint a Receiver and Manager on the ground of Thornton's writ of execution.
The ninth seed was sown on 23rd August 1991 when Barclays (purporting to act "in pursuance of the power conferred on us by clause 9 of the Debenture") appointed the fourth respondent John...
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