Virgin Gorda Yacht Harbour v Little Dix Bay Hotel Company

• Jurisdiction: British Virgin Islands
• Judge: Ellis J
• Judgment Date: 17 August 2022
• Neutral Citation: VG 2022 HC 58
• Docket Number: Claim No. BVIHCV 2016/0111
• Court: High Court (British Virgin Islands)
• Year: 2022

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

Claim No. BVIHCV 2016/0111

Between:

Virgin Gorda Yacht Harbour

Claimant

and

Little Dix Bay Hotel Co.

Defendant

Appearances:

Mr. Sydney A. Bennett, QC and Ms. Anthea L. Smith of Sabals Law for the Claimant

Mr. John McCarroll SC and Mr. Richard Parchment of Harneys for the Defendant

Ellis J

1 At the centre of the dispute between the Parties herein is a written contract entered into by the Parties on 23 ^rd February 2004 (“the Original Agreement”) for the sale of freehold property comprising of the yacht harbor in Virgin Gorda (“the Marina”) as well as a number of businesses that were operated there. The expressed purchase price was US$12 Million. Under clause 8 of the Original Agreement, the time for completion was 75 days after the date of the Original Agreement (i.e. on or by 8 ^th May 2004) unless the Parties agreed otherwise.

2 On 9 ^th June 2004, the Parties entered into a variation Agreement intended to vary the terms of the Original Agreement (“the First Variation”). Under clause 1.1 of the First Variation, the Defendant agreed to grant the Claimant an option to acquire certain additional land in Virgin Gorda held by the Defendant (qua lessee) on a long lease which had been granted by the Crown (“the Option”). The consideration for the grant of this Option was (1) the performance of the covenants and agreements contained in the Original Agreement and (2) payment of the sum of US$1.00. The relevant clause reads:

“1. ADDITIONAL PROPERTY

1.1 In consideration of the premises, of the covenants and agreements contained in the Agreement for Sale and of the sum of $1.00 paid by the Purchaser (the receipt of which is hereby acknowledged) the Vendor shall grant the Purchaser a two year option (“the Option”) to acquire 10 acres of leasehold land currently leased by the Vendor from the Crown (“the Additional Property”) as shown outlined in red (for identification purposes only) on the Plan annexed hereto (“the Plan”) provided that the Option shall be exercisable by the Purchaser only if the Purchaser has completed the sale and purchase as contemplated by the Agreement for Sale. If within the above mentioned two year period the Purchaser gives notice in writing to the Vendor exercising the Option then this Variation Agreement and the notice shall constitute a contract for the sale and purchase of the Additional Property upon the terms hereof.

1.2 It is understood and agreed by the Purchaser that the Additional Property is held by the Vendor on a Crown Lease (“the Crown Lease”) and that the consent of the Crown shall be required for any transfer or sublease of the same and the Purchaser further understands and agrees that the risk of consent not being granted shall be that of the Purchaser and, in the event that the Purchaser exercises the Option in accordance with the provisions in this Clause 1, the Vendor shall give all reasonable support and assistance in connection with the Purchaser's application for consent.

1.3 ——

1.4 The non-exercise by the Purchaser of the Option shall not affect any of the agreements or covenants contained in the Agreement for Sale or in this Variation Agreement, including (by way of illustration and not by way of limitation) the purchase price agreed to be paid under the Agreement for Sale. The parties agree to the following apportionment of the Purchase Price (or such other apportionment as they may otherwise agree): the Property $9,000,000; the Business — $2,000,000; the Additional Property $1,000,000.

3 Pursuant to the First Variation, the two year period for exercise of the Option ran from the date of the First Variation i.e. 9 ^th June 2004 terminating on 9 ^th June 2006 (“the Option Period”). In order to exercise the Option, the Claimant had to provide notice in writing.

4 Clause 12 of the First Variation provided that the completion date under the Original Agreement and the First Variation would be no later than 30 ^th July 2004. The full text of that clause reads:

“12. COMPLETION

12.1 Completion of the sale and purchase agreed pursuant to the Agreement for Sale and to this Variation Agreement shall take place no later than 30 ^th July, 2004 provided that it is understood and agreed that, in the event that the Purchaser exercises the Option in accordance with this Variation Agreement, completion the sale and purchase and the transfer or sublease of the Additional Property may occur at a later date due to the need to obtain the Crown's consent to such transfer or sublease.”.

5 By way of a further variation (“the Second Variation”) dated 17 ^th September 2004. The date of completion under the Original Agreement was pushed to 16 ^th September 2004. Clause 4 of the Second Variation provides:

“4. COMPLETION

4.1 Completion of the sale and purchase contemplated by the Agreement for Sale as varied by the Variation Agreement and this Second Variation Agreement (“Completion”) shall occur on or before 16 ^th September, 2004 or such other date as on that date may in writing be agreed by the parties hereto. Should the Purchaser fail to complete on 16 ^th September, 2004 or such other date as may in writing be agreed by the Parties, the Deposit shall be forthwith paid to the Vendor and neither party shall have any further liability to the other under the Agreement for Sale, the Variation Agreement or the Second Variation Agreement, respectively.”

6 For a number of reasons, completion did not actually take place until 17 ^th September 2004.

7 On 21 ^st August 2006, the Defendant received a letter from the Claimant dated 18 ^th August 2006 in which the Respondent purported to exercise the Option. This relevant excerpt of that letter provides:

“Pursuant to Clause 1.1 of the Variation Agreement in the above captioned, Virgin Gorda Yacht Harbour Holdings Limited hereby exercises the Option granted pursuant to the said clause to acquire the Additional property comprising 10 acres of Leasehold Land at Minton Hill in Virgin Gorda currently leased by Little Dix Bay Hotel Corp. from the Crown which land is shown outlined in red on the Plan annexed to the said Agreement.

The Option having been exercised this notice constitutes a contract between Little Dix Bay Hotel Corp. and Virgin Gorda Yacht Harbour Holdings Limited for the sale and purchase of the Additional Property upon the terms set out in the said Clause.”

8 There was no further communication between the Parties concerning the Option until three (3) years later when, by letter dated 1 ^st July 2009, the Defendant wrote to the Claimant indicating that the exercise of the Option was out of time and of no effect. The relevant excerpt of that letter provides:

“…Please be advised that the Option provided for in the Variation Agreement was for a two-year period from the date of the Variation Agreement and therefore expired on 9 ^th June, 2006. Your letter purporting to exercise the Option is therefore out of time and of no effect.”

9 By letter dated 31 ^st July 2009, attorneys acting for the Claimant responded as follows:

“We disagree with your assertion that the two year option over for the Crown leasehold property expired on 9 ^th June, 2006. We refer to Clause 1.1 of the First Variation Agreement dated 9 ^th June, 2004 which provides that “the Vendor shall grant to the Purchaser a two year option”. The use of the future tense of the verb “grant” makes it quite clear that the grant of the option was to take place in the future. For your interpretation to be correct the appropriate wording would have been “hereby grants”. In addition, Clause 1.1 of the First Variation Agreement states that the option is conditional upon completion of the purchase of the main property having taken place. It follows that the two year option did not commence until the relevant date of completion which was 17 ^th September, 2004. It also follows that our client's written notice to exercise of the option dated 18 ^th August, 2006 fell within that two year period. We would also argue that the fact that your client has not challenged our client's written notice of 18 ^th August, 2006 until nearly 3 years later evidences that it had accepted that the option had been properly exercised.”

10 Following this letter there was no further communication between the Parties until almost 7 years later, on 12 ^th April 2016, the Claimant filed the Claim herein in which it seeks the following relief:

• i. A declaration that the Option provided for by the First Variation dated 9 ^th June 2004 was duly exercised by the Respondent by letters to the Applicant dated 18 ^th August 2006.

• ii. An order that the contract constituted by the First Variation and the exercise of the Option be specifically performed.

• iii. Further and other relief.

• iv. Costs.

11 Over the course of the next two years, the litigation between the Parties proceeded on the basis that the dispute was solely about the validity of the Option and whether or not Claimant had validly exercised the Option in time — that is — until May 2018, when the Defendant's application for summary judgment in this matter was heard. At that hearing, it became clear that the Claimant had radically changed its case, when it sought and obtained permission to amend its statement of claim. By way of its amended statement of claim, the Claimant now also contends that: (i) the Second Variation somehow superseded the Original Agreement and First Variation/Option, (ii) the Second Variation constitutes a separate and conditional contract for sale, and (iii) the condition (payment) having been carried out by the Claimant, the Defendant was obliged to transfer the Option Land (“the Conditional Contract Argument”).

12 The Defendant, however, trenchantly asserts that in reality this claim hinges and has always hinged on the validity and the exercise of the Option rather than the primary argument now advanced by the...