Document Sample

                        IN THE HIGH COURT OF JUSTICE
                                 San Fernando

High Court Action No. S-1057 of 1993


      CHARLES MANKASINGH                                          Plaintiff


      BISSOONDATH SOOKDEO                                         Defendant


      FIRST CITIZENS BANK LIMITED                                 Third Party

Before the Honourable Mr. Justice James C. Aboud


      Mrs. Maharaj S.C. leading Ms. M. Persad, instructed by Daltons, for the
      Mr. Koylass S.C. leading Mr. Waithe, instructed by Lex Caribbean, for the third

Dated: 31 December 2007


1.    The main action in these proceedings was brought to an end by a consent order on
      28 July 2006 in which the defendant, among other things, agreed to pay the
      plaintiff damages for trespass to his dwelling house and legal costs. On that day I
      made other orders that are of no consequence to the issues now before me. A full

                                                                  Page 1 of 27
     narrative of the events leading up to and explaining the consent order and my
     other orders is contained in my Reasons for Decision dated 9 January 2007. The
     judgment having been entered by the plaintiff against him, the defendant then
     sought the relief set out in the third party statement of claim, including a full
     indemnity and orders for damages and restitution. This judgment determines the
     third party proceedings in this action. The events giving rise to both the main
     action and the third party proceedings are not, in the main, disputed.

2.   On 26 April 1986 one Indra Chankasingh Budhai was the registered proprietor,
     under the provisions of the Real Property Ordinance Chapter 27 No. 11, of a
     property described in its certificate of title as No. 248 Mohess Road, Penal. On
     that day she and one Romanie Budhai entered into a memorandum of mortgage
     with the National Commercial Bank of Trinidad and Tobago Limited (the third
     party’s predecessor) in which she conveyed the property to the third party as
     security for a loan. She and Mr. Budhai defaulted on the mortgage payments and
     the third party obtained a money judgment against them on 7 October 1991.

3.   The third party took no action to recover possession of the property under the
     mortgage. Nothing further occurred until sometime in or around April 1993 when
     the third party, in purported exercise of its powers under the memorandum of
     mortgage, offered the property for sale in the newspapers. The advertisement
     requested sealed bids for a “residential/commercial property at L.P. #84 Mohess
     Road, Penal” (by which address the mortgaged property was also known).

4.   At all material times there was a house on the land. It was owned by the plaintiff.
     His father was a tenant of the land since the 1930’s and had erected a dwelling
     house on it. The plaintiff’s father was a tenant of one Chankasingh, a predecessor
     of the mortgagor, Indra Chankasingh Budhai, and he put his son into occupation
     of the house standing on the tenanted land. There is nothing to suggest that the
     plaintiff was not a tenant of the land. The plaintiff obtained a building approval
     and rebuilt the dwelling house, converting the downstairs into two shops, which

                                                                  Page 2 of 27
     he rented to two shopkeepers. He made an apartment for himself upstairs, which
     he used as his residence. The plaintiff occasionally spent time away from his
     home, travelling to North America. At the time of the passage of the Land
     Tenants (Security of Tenure) Act, 1981 (“the Land Tenants Act”) the plaintiff was
     the owner of the house and the tenant of the land. No mention was made of the
     house or the interest of the plaintiff in the memorandum of mortgage. It seems
     likely that Indra Chankasingh Budhai did not tell the third party that the land was
     occupied by the plaintiff or that he might have rights under the statute. It is also
     likely that the third party did not make a site visit or carry out a proper
     investigation before entering the mortgage to determine what rights, if any, were
     vested in the plaintiff by virtue of his occupation. The plaintiff was unaware of
     the mortgage and the registered proprietor’s default. He only became conscious
     that something ominous had occurred when the advertisement was drawn to his

5.   The plaintiff retained an attorney-at-law, Mr. Prem Persad Maharaj, who wrote a
     letter to the third party’s attorneys-at-law. The letter was dated 19 April 1993. In
     it, Mr. Persad Maharaj informed the third party’s attorneys that the plaintiff was
     the tenant in occupation of the land offered for sale in the advertisement. He
     alleged that the plaintiff was a statutory tenant under the provisions of the Land
     Tenants Act. The third party’s attorneys did not reply and Mr. Persad Maharaj
     wrote again on 18 May 1993 requesting a response. On 20 May 1993 the third
     party’s attorneys replied indicating that the property was held by a mortgage, that
     a judgment had been obtained against the registered proprietor, and that its client
     was seeking to enforce its rights under the mortgage.

6.   On 5 June 1993, some five weeks after the third party’s attorneys’ response, the
     defendant made a written offer to the third party pursuant to the advertisement to
     purchase the advertised property for $75,000.       Several weeks later, probably
     during the period when the third party was receiving and evaluating the bids and
     determining whether to accept the defendant’s bid, Mr. Persad Maharaj wrote

                                                                  Page 3 of 27
     another letter to the third party’s attorneys. It was dated 23 June 1993 and it made
     the interesting offer that the plaintiff, as the statutory tenant, was willing to pay
     off either the mortgage debt or the judgment debt owed to the third party. I form
     the impression that the plaintiff wanted to protect his rights without causing
     economic hardship to the third party.

7.   Three weeks after Mr. Persad Maharaj’s offer, namely on 16 July 1993, two
     events occurred. First, the third party’s attorneys wrote the plaintiff’s attorney
     indicating that his client’s offer had been communicated to the third party.
     Second, the third party presented a sale agreement to the defendant, which was
     executed on that day. The sale agreement was prepared by the third party’s
     attorneys.    The quality or frequency of communications, whether by
     correspondence or telephone calls between the third party and its attorneys was
     not fully disclosed on the evidence. The files presented by the third party’s
     attorneys during the trial were incomplete. What was adduced did not suggest a
     very high level of awareness of the coeval significance of the exchange of letters
     between the two attorneys and the events unfolding inside the mortgage
     recoveries department of the third party, which handled the sale.

8.   The sale agreement recited that the third party was selling as mortgagee and it
     contained the standard mortgagee covenant clause: “The lender is selling as
     mortgagee and will give no covenants for title other than those implied by it
     conveying as such”. The property was described as a parcel of land, without any
     mention of the building, but the agreement nonetheless made the sale subject to
     the tenancies of the two downstairs shopkeepers, who were specifically named.
     The third party obviously had information about these tenants but, apparently, no
     information that the plaintiff was their landlord, that the plaintiff owned the
     building, or that he lived in the upstairs apartment. In fact, the sale was not made
     subject to any right or interest that the plaintiff might have possessed as occupier
     of the land or even the upstairs apartment. This is all the more surprising because
     the third party’s attorneys, who drafted the agreement, had been engaged in

                                                                  Page 4 of 27
     correspondence with Mr. Persad Maharaj since 19 April 1993, a period of just
     over three months. The sale agreement also provided that, upon completion, the
     third party would deliver possession of the premises to the defendant.

9.   The defendant made a ten per cent deposit on the purchase price upon execution
     of the agreement on 16 July 1993. His attorneys, Messrs. Hobsons, then carried
     out a title search on the property, as they ought properly to do, after the sale
     agreement was executed. The search was as to title only, and in the case of
     registered property this would have entailed an examination of the certificate of
     title to determine what endorsements appeared to the back of the title and any
     other necessary searches as to title, for example, an examination of pertinent
     memoranda, particularly the clauses in the memorandum of mortgage. Neither
     the certificate of title nor the memorandum of mortgage contained any
     endorsement or mention of the plaintiff’s interest as occupier, or the existence of a
     building on the premises. Mr. Koylass SC, for the third party, argued that the
     purchaser’s attorney had a duty to carry out a physical inspection of the premises,
     and to go behind the register. While it is true that a physical inspection would
     have revealed the existence of the house and the interests of all its occupants, the
     law and practice of conveyancing has never cast such wide duties on a
     purchaser’s attorney at the pre- or post- contract stage. Their duty is to carry out a
     title search and to determine, on the basis of paper records, whether the vendor
     has the title he has contracted to convey. Where a purchaser points out the
     existence of a potential defect to his attorney then liability might arise if the
     information is not verified.     Liability cannot arise in the absence of such
     information. If it were otherwise then conveyancing attorneys would be forced to
     have property inspectors and land surveyors on their staff. I do not think that the
     defendant’s attorneys can be blamed whatsoever in restricting their enquiries to a
     search of paper records.     They are justified in taking the description of the
     property on the certificate of title and the third party’s memorandum of mortgage
     at face value, namely, that the third party was selling a parcel of land in fee simple

                                                                   Page 5 of 27
      in possession under valid powers derived from the memorandum of mortgage,
      subject only to the tenancies of the two shopkeepers.

10.   The existence of the house and its occupants was not however unknown to the
      defendant. He owned an adjoining property on which he carried out the business
      of a grocer. For some ten years he knew the plaintiff to be an occupant of a
      portion of the building, although he was not aware that the plaintiff was claiming
      to be a statutory tenant. He was aware that the downstairs shopkeepers were
      tenants, but he said he made no enquiries of them to find out who was their
      landlord. The ownership of the house and the tenancies of the two downstairs
      shopkeepers were clues, and prudent purchasers should follow clues that might
      reveal the existence of interests not disclosed on the register. In my view, a
      purchaser, even of registered land, has a duty, when signs of a possible adverse
      interest are apparent, to go behind the register and determine their status.
      However, for reasons I will come to, I do not, in the circumstances of this case,
      rate the defendant’s failure to investigate the potential clues as a ground upon
      which this case will turn, although this was Mr. Koylass’ submission.

11.   The defendant saw the advertisement in the paper and responded with eagerness,
      hoping to acquire the property, operate a grocery business in the downstairs
      portion and to rent the upstairs as a residence. His attorneys wrote him on 26 July
      1993 stating that the title to the property was unencumbered. Two days later, on
      28 July 1993, he paid off the balance of the purchase price. On that day Messrs.
      Hobsons forwarded the memorandum of transfer to the third party’s attorneys,
      and on 29 July 1993 it was sent to the third party’s head office in Port of Spain for
      execution, the contents having been approved by the third party’s attorneys. The
      transfer was expressed as being subject to the “existing tenancies”. In a later draft
      of the memorandum, delivered by Hobsons to the third party’s attorneys, the
      names of the two downstairs shopkeepers were inserted. It was never argued
      before me that the words “existing tenancies” was meant to include the plaintiff.
      Soon after these events the defendant approached his bankers seeking a loan of

                                                                   Page 6 of 27
      $300,000 to carry out the necessary renovations of the property. The defendant
      was obviously anxious to get into the property and execute his business plan
      without delay.

12.   On 30 July 1993 the third party’s attorneys wrote Mr. Persad Maharaj another
      letter. It had sought and obtained instructions from its client, which were that the
      third party had already accepted an offer and had agreed to sell the property
      “subject to the tenancy”. It is likely that this reservation pacified the plaintiff
      because it suggested that his occupancy was recognized.

13.   On 7 August 1993 the defendant visited the premises and went into the upstairs
      apartment.   He broke the lock.      No one was at home.       The furnishing and
      appliances were aged and seemed to be in a poor state of repair. There is some
      confusion as to whether the defendant entered the property on the advice of the
      third party. The pleadings suggest that an officer of the third party advised him to
      enter the upstairs apartment. However, he testified that he entered on the basis
      that he had executed the agreement and fully paid for the property, and I take his
      testimony as the truth. He left everything intact in the apartment but replaced the
      lock. Later that day the plaintiff visited his apartment, broke the defendant’s lock
      and put his own lock on the door. At this stage the defendant’s actions were
      limited to destroying the lock and briefly entering the upstairs apartment. The
      plaintiff’s response was to restore the physical status quo. This status quo would
      be maintained until the events that I hereafter set out.

14.   The defendant having now recognized that the plaintiff was asserting some, as yet
      undefined, right to remain in possession, almost immediately instructed Hobsons
      to write two letters. The first dated 11 August 1993, was addressed to the third
      party’s attorneys, advising them that the defendant was unable to obtain
      possession as the plaintiff had broken his lock and asserted a right to possession
      of the apartment. The letter also requested their assistance. The other letter dated
      16 August 1993 was addressed to the plaintiff, demanding that he vacate the

                                                                   Page 7 of 27
      building. On the same day that Hobsons wrote their letter to the plaintiff, he filed
      these proceedings against the defendant, seeking declarations, damages for
      trespass, and injunctive orders to protect his possession.

15.   Before service could be effected, and, in fact, on the day after the writ of
      summons and statement of claim was filed, namely on 17 August 1993, the
      defendant re-entered the apartment.        In his evidence he said that he had
      complained to the third party about the failed attempt to take possession on 7
      August 1993 and that the third party offered to assist. He said that one Mr.
      Oswald Alexsis, a bailiff employed by the third party, and sent by them to recover
      possession, officiated at the re-entry.     They broke the plaintiff’s lock and
      participated in the removal of the plaintiff’s possessions. The third party has
      denied that the bailiff was sent by them, but its sole witness, Mr. Allyson
      Deonanan, was unable to disturb the defendant’s testimony that the bailiff was
      acting on its behalf. In the first place, there is the evidence of Mr. Alexsis who
      said he had the authority of the third party. In addition, he endorsed a note on the
      back of his receipt that suggested that he was not acting as an independent
      contractor. The retention of a bailiff employed by the third party is difficult to
      ignore as a mere coincidence when there are many other bailiffs operating in and
      around rural districts. However, even if he were not instructed to assist the
      defendant, the onus would have been on the third party to rebut the defendant’s
      evidence. Mr. Deonanan, had no knowledge of this important event, or indeed,
      much of the transactional history, as he said that he was not given an opportunity
      to peruse the third party’s files. On a balance of probabilities I hold that the
      bailiff evicted the plaintiff as agent for the third party, having been sent there on
      its instructions or with its consent and approval. I am fortified in this view
      because it was an obligation in the sale agreement that, subject to the tenancies of
      the named shopkeepers, the third party would deliver possession to the defendant.
      In the absence of an order for possession under the memorandum of mortgage, the
      third party would have had no sensible means of delivering possession in
      compliance with its contractual obligation, save by providing the assistance of its

                                                                   Page 8 of 27
      bailiff. Further, there is no evidence of any warning to the defendant by any
      officer of the third party not to disturb the plaintiff’s possession.        This is
      unsettling in light of Mr. Persad Maharaj’s correspondence, which, I must
      assume, had been forwarded to it by its attorneys.

16.   The plaintiff having been evicted, and his possessions put outside of the building,
      on 18 October 1993 he sought and obtained an ex-parte interlocutory injunction
      against the defendant, setting out his claim under the Land Tenants Act. He
      obtained orders to prevent the defendant from entering the premises. These were
      subsequently vacated in a manner that is of no interest to the issues in the case.

17.   Two days after the ex parte injunction was obtained, the third party’s attorneys
      wrote Hobsons (on 20 August 1993) requesting that they hold their hands on
      registration of the memorandum of transfer, which, by that time, had already been
      executed by the third party.       They said that they were conducting further
      investigations into the existence of an additional tenancy of a statutory nature and
      that they would try to achieve an amicable settlement for all concerned parties.
      Three days later, on 23 August 1993, the third party’s attorneys again wrote
      Hobsons and informed them that their investigations revealed that there was no
      tenancy and that they should proceed to stamp and register the memorandum of
      transfer. The advice to stamp and register the memorandum of transfer was not
      followed. At this time Hobsons would have been aware of the plaintiff’s suit and
      the injunction he obtained against their client. To date the memorandum of
      transfer is unregistered. The interlocutory proceedings were pursued and the
      defendant, having by this time retained his current attorneys, contested the
      plaintiff’s claim that he was a statutory tenant and his right to injunctive relief.
      On 17 January 1994, while the action was well underway, the defendant’s new
      attorneys wrote the third party’s attorneys requesting the information that had
      been obtained during the investigations into the plaintiff’s occupation prior to and
      at the time of the sale. The third party’s attorneys replied on 24 January 1994.
      They said that they had referred the question to the firm of attorneys (not

                                                                    Page 9 of 27
      themselves) that had prepared the 1986 memorandum of mortgage. I mark this
      response as unaccommodating and unhelpful.          Nothing further developed in
      relation to these enquiries and the defendant was left to defend the action with
      whatever evidential resources he could muster.

18.   On 19 October 1994 the defendant obtained the court’s leave to issue third party
      proceedings, claiming, among other things, an indemnity.           The third party
      statement of claim was amended and re-amended to include a claim for damages
      for breach of contract, damages for loss of bargain, and a refund of the purchase
      price with interest. The third party’s defence rested mainly on the protection of
      the mortgagee covenant clause in the sale agreement and placed the blame for the
      defendant’s predicament on his actions in evicting the Plaintiff and not causing
      his attorneys to properly investigate the encumbrances affecting the title. The
      proceedings involved several interlocutory applications connected to the
      injunction and the amendment of the pleadings. The plaintiff asserted his claim,
      the defendant defended and counterclaimed for possession, and the third party
      remained, in effect, on the sidelines, maintaining that it was not liable to provide
      an indemnity or submit to any other claim of the defendant. It took several years
      before the matter could be set down for trial and the court file discloses many
      adjournments for one reason or another. It was only in April 2006 that the third
      party for the first time made a formal offer in writing to refund the purchase price,
      but without the payment of interest. This was a few weeks before the trial of the
      main action started before me, when the action was already some 13 years old.

19.   The trial began on 5 May 2006 and after three days of evidence, involving
      extensive cross-examination of the plaintiff, it became apparent that his
      occupation could not be disturbed and that he was the owner of the house in
      which his family had lived since the 1930’s. In the course of his evidence he
      produced a document signed by Chankasingh as landlord. Mrs. Lynette Maharaj
      SC, for the defendant, cross-examined him on it and then applied for an
      adjournment to consider the evidence. She later told me that she had verified the

                                                                   Page 10 of 27
      authenticity of the document and reconsidered her position in light of the viva
      voce evidence. With my approval the litigants, including the third party, entered
      into tripartite negotiations to try and resolve the entire action. Eventually, on 28
      July 2006, after several adjournments meant to facilitate discussions, the plaintiff
      and defendant, in the presence of the third party’s Senior Counsel, entered into a
      consent order whereby the plaintiff’s right to occupation was recognized, and the
      defendant agreed to pay damages of $25,000 and costs to the plaintiff. Mrs.
      Maharaj asked for a stay of that part of the consent order to pay the damages and
      costs, but I refused and my decision is now on appeal. The action then proceeded
      as between the defendant and the third party.

20.   Before identifying the issues to be decided I should make a few general remarks
      about one aspect of the facts. The third party took a strategic decision not to call
      its own attorneys as a witness. However, it had no legal obligation to do so on the
      basis of its pleaded case. Instead, the defendant subpoenaed the third party’s
      attorneys commanding that they supply their files in the conveyancing
      transaction. The senior partner of the firm was commendably forthright in his
      evidence but, because of his lack of familiarity with the transaction and the fact
      that the associate who handled the transfer was no longer with the firm, he could
      only provide sketchy information from incomplete files. It is not known whether
      the associate at the firm kept the manager of the mortgage recoveries department
      up to date with all the correspondence from Mr. Persad Maharaj, or whether the
      manager fully informed the attorneys of his dealings with the defendant. It is
      possible that the firm’s associate and the mortgage recoveries manager were
      acting with different goals in mind or on the basis of different information, but I
      cannot say for sure. I can find no proper explanation for the attorneys’ letter of 20
      August 1993 (which advised Hobson’s not to register the memorandum of
      transfer pending the investigation into the plaintiff’s statutory tenancy) when the
      third party’s (and not the firm’s) bailiff had already dispossessed the plaintiff
      some three days earlier. Mr. Deonanan was not helpful due to his unfamiliarity
      with the transaction and could not say anything useful about communication

                                                                   Page 11 of 27
      between the third party and its attorneys. Notwithstanding the above I must
      assume, in the absence of any evidence to the contrary, that the third party knew
      everything that its attorneys knew and vice versa.

21.   The following issues are joined on the pleading:
         (1)   Should the third party indemnify the defendant for the damages for the
               trespass in the sum of $25,000 and costs of the main action?
         (2)   Should the court rescind the sale agreement and the memorandum of
         (3)   Is the defendant entitled to the repayment of the purchase price together
               with interest from 28 July 1993, and, if interest is payable, should it be
         (4)   Is the defendant entitled to the repayment of his conveyancing costs with
         (5)   Is the defendant entitled to damages for breach of contract or
               negligence and, if so, what is the measure of damages?
         (6)   Should the third party pay the defendant’s legal costs for defending the
               plaintiff’s action and his costs of the third party proceedings?

22.   In order to answer these questions the legal effect of all the events, beginning with
      the plaintiff’s occupation, must be evaluated. At the time that the registered
      proprietor mortgaged the property the plaintiff had already acquired statutory
      rights under the Land Tenants Act. On 1 June 1981, which is the day that the Act
      came into force, the plaintiff was a tenant of land on which a dwelling house was
      constructed in accordance with section 4 (1).        His tenancy was on that day
      converted to a statutory lease for an initial term of 30 years with an option to
      renew for a further 30-year term.    Under the Act he was entitled to call upon the
      registered proprietor to sell him the freehold reversion in the land at half the
      market value. It follows from this that the only interest that Indra Chankasingh
      Budhai could lawfully mortgage was the reversion in the land after the expiry of
      the 30-year statutory lease, which, unless renewed, would expire in 2011, and, if

                                                                   Page 12 of 27
      renewed, in 2041 assuming that, during either term, the plaintiff did not exercise
      his option to purchase the freehold. When the third party agreed to accept the
      property as security it would have been customary for a valuation to be carried out
      to determine the strength of the security. The valuator would have inspected the
      property and recorded his observations.          This is a normal banking practice:
      Gibson’s Conveyancing 18th edition p. 279. A mortgagee bank might even send
      one of its loan officers to visit the site, if the loan is small and it elects not to
      obtain a formal valuation. Such checks would have revealed the existence of the
      plaintiff and his tenancy. It may be that the registered proprietor falsely described
      the property as vacant land, or perhaps she was unaware of the true facts. I do not
      know because the evidence was not adduced. But something as tangible as a
      house built and occupied by a tenant in 1986 is not something that should be
      lightly overlooked, especially so soon after the passage of the Land Tenants Act.
      The third party therefore took a risk in accepting the security without any
      verification of the legal status of the person in possession.

23.   The right of the statutory tenant to purchase the freehold is not impeded by any
      charge granted by the landowner. Section 17 of the Land Tenants Act makes this
               A conveyance executed to give effect to section 9(1) shall, as regards any charge
               on the landlord’s land (however created or arising) to secure a mortgage, not
               being a mortgage subject to which the conveyance is to be made or which would
               be overreached apart from this section, be effective by virtue of this section to
               discharge the land from the mortgage…and shall do so without the persons
               entitled to or interested in the mortgage…becoming parties to or executing the

      The plaintiff therefore had a subsisting right that overreached the interest acquired
      by the third party in the memorandum of mortgage, which was exercisable at any
      time after the mortgage was registered. It is a draconian legal right, unlike any in
      the law of real property, and it is exercisable at the peril of mortgagees who must
      therefore be vigilant when accepting a charge over non-owner occupied premises.

                                                                       Page 13 of 27
24.   The right to remain on or to purchase the tenanted land is exercisable, not only
      against the land upon which his house’s foundation is built but its entire
      curtillage: all of the land comprised in the tenancy.            The house is only a
      prerequisite for the creation of the statutory lease; it is not the lone subject matter
      of the statutory lease or the overreaching provision. Whether the property is
      described as a parcel of land or a residential/commercial building on a parcel of
      land in a mortgagee sale agreement is irrelevant. The Act binds the land and the
      building erected on it. The third party therefore took as a security for its loan, a
      property against which no order for possession could be made, whether of the
      house or its curtillage. The memorandum of mortgage was duly registered and
      endorsed on the certificate of title. The question arises as to whether registration
      of the 1986 memorandum of mortgage under the Real Property Ordinance can
      defeat the plaintiff’s 1981 statutory interest. Section 45 of the Ordinance provides
      as follows:
             Notwithstanding the existence in any other person of any estate or interest,
             whether derived by grant from the Crown or otherwise, which but for this
             Ordinance might be held to be paramount or to have priority, the proprietor of
             land or of any estate or interest in land under the provisions of this Ordinance
             shall, except in case of fraud, hold the same subject to such mortgages,
             encumbrances, estates, or interests as may be notified on the leaf of the Register
             Book constituted by the grant or certificate of title of such land, but absolutely
             free from all other encumbrances, liens, estates, or interests whatsoever, except
             the estate or interest of a proprietor claiming the same land under a prior grant or
             certificate of title registered under the provisions of this Ordinance, and any
             rights subsisting under any adverse possession of such land; and also, when the
             possession is not adverse, the rights of any tenant of such land holding under a
             tenancy for any term not exceeding three years, and except as regards the
             omission or misdescription of any right of way or other easement created in or
             existing upon such land, and except so far as regards any portion of land that
             may, by wrong description of parcels or of boundaries, be included in the grant,
             certificate of title, lease, or other instrument evidencing the title of such
             proprietor, not being a purchaser or mortgagee thereof for value, or deriving title
             from or through a purchaser or mortgagee thereof for value.

25.   Section 45 has the intended effect of liberating the title of the registered proprietor
      from all encumbrances and charges not endorsed on the certificate of title except,
      among other encumbrances, those subsisting under any adverse possession or the
      rights of any tenant of a lease not exceeding three years. The Ordinance was
      proclaimed on 1 January 1946. The Land Tenants Act was assented to and took

                                                                       Page 14 of 27
      effect on 1 June 1981 and it was enacted although inconsistent with sections 4 and
      5 of the Constitution. Section 4(a) of the Constitution preserves the fundamental
      right not to be deprived of the enjoyment of property except by due process of
      law. The Land Tenants Act interfered with the freehold rights of landowners who
      had rented land to tenants on which the tenants had built dwelling houses. The
      freehold rights became subordinate to a 60-year statutory lease and might also be
      extinguished by the statutory tenant’s exercise of his option to purchase under
      section 9(1). Moreover, in the exercise of the option the freehold owner would
      lose any security he offered to a lender by way of mortgage or charge. The Land
      Tenants Act at section 4(1) creates the statutory lease “notwithstanding any law or
      agreement to the contrary.” Parliament must be deemed to have been aware of
      the Ordinance at the time it enacted the Land Tenants Act in 1981. In the
      circumstances, it must have intended to alter the law so as to treat the statutory
      lease as a legal interest that could override the certificate of title.

26.   The Ordinance and the Land Tenants Act must be read together. There is nothing
      in the latter to suggest that it only applies to unregistered or common law
      heriditaments: it applies to all land in Trinidad and Tobago. In any event, land
      tenancies in Trinidad and Tobago, especially in rural areas, have historically taken
      effect as annual periodic tenancies. There is nothing in the evidence to suggest
      that the plaintiff’s lease was otherwise granted. Such leases would fall into the
      category of leases not exceeding a term of three years, as specified as one of the
      exceptions in section 45 of the Ordinance. The term “lease” in section 45 of the
      Ordinance must refer to the lease agreement between the landlord and the tenant,
      and not the statutory lease created by Parliament some 35 years later. To interpret
      the law otherwise would be to demand that tens of thousands of statutory tenants
      would be deprived of their rights unless they sought to have their statutory
      interests endorsed on their landlord’s certificates of title. The erosion of these
      statutory rights by section 45 of the Ordinance could not have been Parliament’s
      intention when it passed the Land Tenants Act in 1981. Without any plain
      legislative expression of a contrary intention, I would not be prepared to hold that,

                                                                       Page 15 of 27
      because he did not endorse his interest on his landlord’s certificate of title, the
      plaintiff’s statutory lease became ineffectual. I should also mention that the Land
      Tenants Act was part of a package of legislation passed by Parliament in 1981,
      including the Law of Property Act, 1981 and the Land Registration Act, 1981
      (both modelled on the United Kingdom legislation of 1925) that would have
      revolutionised the system of land law in this country, and, among other things,
      created a system of registration of legal and equitable interests.       These two
      statutes have never been proclaimed due, in part (as I recall) to administrative
      difficulties in modernising the land registration machinery at the Registrar
      General’s department. The Land Tenants Act therefore stands by itself in a
      legislative environment that is imperfect, uncertain, and in urgent need of
      executive or parliamentary intervention.

27.   In Chisholm v. Hall (1959) 1 W.I.R. 413 the Board of the Privy Council dealt with
      the effect of Jamaica’s then Limitation of Actions Law, which created a statutory
      right that purportedly ousted the operation of a section similar to section 45 of the
      Ordinance.    The facts are not on point but Lord Jenkins recognized that a
      purchaser of registered land has the onus of going behind the register and
      satisfying himself that no prior adverse interest was acquired. This advice, to my
      mind, is equally, if not more, pertinent to mortgagees taking a transfer of
      registered land as security for a loan.      The mortgagor’s title is part of the
      consideration for the loan. It must be a freely alienable and marketable title
      because in the event of a mortgagor default its loan and outstanding interest is

28.   As previously stated, the third party could only take a mortgage of the reversion
      that remained after the expiration of the statutory lease and the mortgagor’s
      interest was nonetheless subject to the tenant’s right to acquire the freehold
      interest under section 9(1). A vendor, whether selling as beneficial owner or as
      mortgagee, can only sell the title that he has.       In advertising the sale of a

                                                                   Page 16 of 27
      “residential/commercial building on 7,016 square feet land” the third party was
      offering to sell something that it did not own.

29.   The agreement for sale perpetuated the same misconception. It did not properly
      describe the interest being sold. It made no mention of the plaintiff’s statutory
      interest.   It contained the contractual obligation to deliver possession of the
      property to the defendant upon completion. It identified the names of the two
      downstairs tenants but made no mention of the plaintiff, as either occupier or
      owner of the building.      The inclusion of the names of the two downstairs
      shopkeepers was either the result of the third party’s inadequate investigations or
      representations made to it by persons unknown. Mystery shrouds this part of the
      evidence as no explanation was provided by the third party or its attorneys. This
      is all the more worrisome because the third party’s attorneys were already fully
      aware of the plaintiff’s claim and his offer to pay off the mortgage debt. In fact,
      the attorneys had communicated the plaintiff’s offer to the third party but the offer
      was rejected, on what grounds I was not told. The sale agreement was prepared
      by the third party’s attorneys when its associate was already aware of the
      plaintiff’s assertions. It was delivered to the third party for execution when the
      third party was also aware of the assertions. Throughout this period the third
      party, whether by itself or through its attorneys, did not inform the defendant of
      the plaintiff’s assertions. It would not be unreasonable for the defendant to now
      believe that these developments were being deliberately suppressed. The third
      party has not explained why the defendant was not informed of the plaintiff’s
      assertions by correspondence or even by a telephone call. Its attorneys drafted the
      sale agreement as if the assertions had never been made. The withholding of the
      information disturbs me because the objective of every conveyancing attorney
      ought to be the development of a public record of land transactions that is true,
      certain, and free from controversy.       In this sense the conveyancer puts the
      integrity of the public record above the selfish commercial interests of his client.
      His role is not adversarial or strategic like his counterpart in the courtroom.

                                                                    Page 17 of 27
30.   The third party uses the mortgagee covenant clause like a shield. “The lender is
      selling as mortgagee and will give no covenants for title other than those implied
      by it conveying as such.”        The covenant implied in every conveyance or
      memorandum of transfer is found in section 27(1) F of the Conveyancing and
      Law of Property Act Chapter 27 No. 12:
             In any conveyance, the following covenant [is implied] by every person who
             conveys and is expressed to convey as trustee or mortgage… which covenant
             shall be deemed to extend to every such person’s own acts only, namely:-

                     That the person so conveying has not executed or done, or knowingly
                     suffered, or been party or privy to, any deed or thing, whereby or by
                     means whereof the subject matter of the conveyance, or any part thereof,
                     is or may be impeached, charged, affected, or encumbered in title, estate,
                     or otherwise, or whereby or by means whereof the person who so
                     conveys is in anywise hindered from conveying the subject matter of the
                     conveyance, or any part thereof, in the manner in which it is expressed to
                     be conveyed. (Emphases mine.)

31.   The third party was aware of the plaintiff’s assertion prior to entering the sale
      agreement. It was therefore privy to a thing or matter that could potentially
      impeach the subject matter of the memorandum of transfer. The sale agreement
      obligated the third party to deliver possession. Had the plaintiff’s claim been
      properly investigated the third party would have realised that it could not deliver
      possession on the completion date. As the mortgagee of the reversion it could not
      convey the freehold in possession. It had received information and it ought to
      have properly investigated the assertions of the plaintiff before undertaking to sell
      the fee simple in possession. In this sense, the information to which it was privy,
      impeached the title, and hindered it from conveying the title it contracted to sell.
      The third party’s authority to sell was derived from the memorandum of
      mortgage.    The memorandum of mortgage was ineffective as a transfer of
      anything other than the freehold reversion. The third party’s power to sell the fee
      simple in possession cannot therefore be derived from the memorandum of
      mortgage. Accordingly, the third party could not, having taken the mortgage,
      convey the property in the manner in which it was expressed to be conveyed. It
      was selling as mortgagee of the fee simple in possession but it was, in fact, only
      the mortgagee of the freehold reversion.           Additionally, and perhaps more

                                                                     Page 18 of 27
      importantly, the third party was responsible for the drafting and registration of the
      memorandum of mortgage, which is an act or deed by which the title became
      impeachable. At the time that it was registered, the plaintiff’s statutory interest
      had already crystallised but the transfer by way of mortgage was not made subject
      to his interest, thus perpetuating two fictions: first, that it did not exist, and
      second, that it could exercise its power of sale regardless of its existence.
      Property held on mortgage by a bank is expected to be and is usually thoroughly
      investigated. In this case it was not. Put another way, if a mortgagee is aware of
      the overreaching interest of a person in adverse possession, should it recite his
      interest in the memorandum of mortgage, or at any rate take steps to rectify the
      certificate of title? I do not ask these questions with any particular answers in
      mind nor is it my intention to cast any new or general duties on mortgagees of
      registered land. I only want to demonstrate that the term implied in a mortgagee
      sale by section 27 (1) F of the Conveyancing and Law of Property Act is flexible
      enough to include the act of registering a mortgage that is wholly ineffective to
      support its self-contained powers of sale.

32.   There is no gainsaying the fact that it is the duty of a vendor to disclose every
      encumbrance of which he is aware: Vol. 18, the Encyclopaedia of Forms and
      Precedents 4th ed., p. 156, paras. 317-318.        This is so whether or not the
      purchaser is aware of the encumbrance: Emmet’s Notes on Perusing Titles, 17th
      ed., Chap. 13, p. 524 and Great Western Railway Company v. Fisher (1905 1
      Ch.D 316.) The logic behind this is that the vendor is deemed to have better
      knowledge of his title than the purchaser. The vendor will be in default unless he
      discloses what he knows, or what, if he makes proper enquiry, he ought to know:
      The Encyclopaedia of Forms and Precedents, Vol. 18, 4th ed., p. 156, para. 318.
      There is no obligation on the purchaser to make enquiries, or to go behind the
      register before entering the sale agreement.         These general principles of
      conveyancing are not simply thrown away in a mortgagee sale. A mortgagee is
      not lawfully entitled to suppress information that impeaches its title so
      fundamentally that it is unable to convey the title it has contracted to convey or

                                                                   Page 19 of 27
      prevents it from delivering possession.            Such freedom would lead to
      conveyancing chaos.

33.   The fact that the defendant was for a period of 10 years an adjoining landowner,
      and aware that the plaintiff occupied the property does not, to my mind, relieve
      the third party of liability. The defendant was entitled to take the advertisement at
      face value, and to rely on the third party in drafting the sale agreement to insert all
      the encumbrances of which it was aware. The defendant was also entitled to rely
      on the third party to bring any assertions of an adverse interest to his attention.
      The inclusion of the two downstairs shopkeepers in the sale agreement suggested
      that a proper investigation was undertaken. The defendant was not in possession
      of all the facts or interests affecting the title before he entered into the contract,
      but the third party had knowledge of an assertion that it ought properly to have
      investigated, or, at the very least, disclosed to the defendant prior to the contract.
      It cannot erect the mortgagee covenant clause as a fence around important
      information and then pretend as if the information does not exist. The mortgagee
      covenant clause is designed to protect the mortgagee against unknown, not
      known, perils. Mr. Koylass stressed that a mortgagee’s title is the worst title that
      a purchaser can acquire and that he should not be immune to the danger of a bad
      title. This is another way of saying caveat emptor. I cannot extend that principle
      to the practice of conveyancing in cases where a mortgagee is put on notice of a
      formal legal claim by a third party and allows a purchaser to blindly contract,
      oblivious to the claim. In any event, caveat emptor has no place in conveyancing
      if the defect is known only to the vendor and not disclosed. The proper thing to
      have done was to disclose the information, agree to postpone the transaction, and
      thereafter fully investigate and resolve the plaintiff’s assertions. The potential
      loss of the principal debt and interest owed by the mortgagor on a failed sale
      transaction with the defendant would have been far cheaper than these protracted
      and very expensive proceedings. As Lord Denning said in a different context,
      hindsight is always 20/20. In conveyancing the foresight of dogmatic men is
      invariably better than the hindsight of every other type of man.

                                                                    Page 20 of 27
34.   The trespass that occasioned the order for damages was the second trespass that
      occurred under the supervision of the third party’s bailiff on 17 August 1993
      when the plaintiff was evicted; it was not the brief initial entry and lock
      replacement on 7 August 1993.            The second trespass was based on the
      representations in the sale agreement that, but for the two shopkeepers’ tenancies,
      the third party would deliver possession of the premises. The presence of the
      third party’s bailiff signified its support, consent, and orchestration of the trespass.
      I therefore hold the third party liable for the repayment of the damages and the
      costs of the main action.

35.   The memorandum of transfer was never registered and therefore it is not correct
      to say that the sale agreement merged with it, and cannot be sued upon. The
      merger takes place upon registration of the instrument and endorsement on the
      certificate of title: Knight Sugar Company Ltd v. The Alberta Railway &
      Irrigation Company [1938] 1 All E R 266 PC. The sale agreement is subsumed
      upon registration of the memorandum, and not before. The memorandum of
      transfer is valueless and ineffective because it does not operate as a transfer of the
      property that the third party contracted to sell. Further, it was clearly the intention
      of the parties that save for the two downstairs shopkeepers, the defendant would
      have vacant possession on completion.          Such a contractual intention would
      survive the memorandum of transfer, even if it had been registered. To date the
      third party has failed to deliver vacant possession and is therefore in continuing
      breach of the term of the contract which promised it, irrespective of the execution
      of the transfer. In this regard, see Hisset v. Reading Roofing Co. Ltd [1969] 1
      WLR 1757. The sale agreement must be rescinded, and, because it was executed,
      and might misrepresent the current state of affairs, I will also rescind the
      memorandum of transfer.

36.   Apart from the breach of the sale agreement, the third party is also liable for non-
      disclosure that, in my view, is sufficient to vitiate it. As a consequence of the

                                                                     Page 21 of 27
      non-disclosure the defendant paid the full purchase price, retained attorneys for
      whose services he paid $948.75, and was drawn into costly and protracted
      litigation. I do not take the view, as argued by Mr. Koylass, that the defendant
      should have accepted the plaintiff’s case at face value and submitted to judgment.
      Mr. Koylass vigorously argued that the defendant’s decision to resist the
      plaintiff’s claim over these many years relieves the third party from any liability
      to indemnify him for the costs of the main action. I take a different view. The
      defendant was entitled to call upon the plaintiff to prove his case, and if he proved
      it, seek an indemnity from the third party. Sometimes, the least predictable thing
      is the outcome of a trial.      I also take into consideration that when these
      proceedings commenced the third party failed to share the results of its
      investigations, which (as it now turns out) incorrectly purported to dismantle the
      legitimacy of the plaintiff’s claim. The responsibility to bring the litigation to an
      end in the 1990’s was as much the defendant’s as it was the third party’s. Why
      didn’t the third party offer to repay the purchase price to the defendant soon after
      the plaintiff sued? Might that not have precipitated a settlement? Why was it that
      only on the eve of the trial it made the offer, but without any interest. Even to
      date, the third party is maintaining that it is has no legal obligation to repay the
      purchase price. That argument cannot be correct when the consideration has
      wholly failed. It would not have been reasonable for the defendant to withdraw
      his lawyers without securing either the property or the purchase price and interest.

37.   The defendant has claimed damages for breach of contract and loss of bargain.
      Bain v. Fothergill [1874] L R HL 158, upon which Mr. Koylass relied, is
      authority for the rule that upon a contract for the sale of real estate where the
      vendor is unable to make good title the purchaser is not entitled to recover
      damages for loss of bargain. The rule, like every other, is not without exceptions.
      Where the damages claimed are as a result of the vendor’s inability to give good
      title due to his own default, there is no limitation on the sum which is recoverable:
      12 Halsbury’s Laws of England, 4th ed., p. 468, para. 1183. A vendor must do
      everything in his power to enable completion of the contract: Day v. Singleton

                                                                   Page 22 of 27
      [1899] 2 Ch 320. Further, the onus is on the vendor to prove his inability to carry
      out his contractual obligations, and this involves showing positively that he has
      used his best endeavours to do so: Malhotra v. Choudhury [1980] Ch 52, CA. In
      Wroth v. Tyler [1974] Ch 30 a husband, unable to perform his contract to sell a
      house with vacant possession because his wife, having a statutory right of
      occupation, would not agree, was held fully liable for all damages.

38.   As a general principle the rule in Bain v. Fothergill is sound. Real property is
      unlike personal property, as the exact nature of title, and whether it is good
      against the world, is not something that even competent lawyers can predict.
      According to Holroyd Pearce LJ in St. Marylebone Property Co Ltd v.
      Fairweather [1962] 1 QB 498, 513:
               Title to land is pragmatic. It is true if and so long as it works. It works if it
               only comes up against a weaker title. But if it is challenged by a stronger title,
               it ceases to be a true title and must give way...Thus even a fee simple is only
               good as long as no better title can be shown.

      The key issue is whether the third party’s failure to make good title is a result of
      its own default. If it can satisfy the court that that it has not defaulted then it can
      avail itself of the rule. Bain v. Fothergill is not an antidote against every claim for
      loss of bargain. In that case, Mr. Fothergill was in possession of a mining royalty
      under a written agreement for a lease, of which he had taken an assignment. One
      of the stipulations of the agreement was that the original lessee should not assign
      without the consent of the lessors. The lessors were ready to consent to the
      assignment to Mr. Fothergill provided he executed a duplicate of the agreement
      containing the stipulation. Though repeatedly communicated with on the subject
      he delayed in doing so. He then entered into a contract with a third party to sell
      his interest in the royalty, but it was afterwards found out that the lessors
      absolutely refused their assent to the transfer and Mr. Fothergill was unable to
      perform his contract with the third party. Lord Hatherley, in the House of Lords,
      in his comprehensive review of the cases, said this:
             In Engel v. Fitch (1869) LR 4 QB 659, mortgagees sold the lease of a house and
             undertook to give possession on the completion of the purchase. The title was
             good, but when the time arrived, the mortgagor, who was in actual occupation,

                                                                       Page 23 of 27
             refused to quit. The purchaser was held entitled to recover damages as well as
             expenses. That case was carried to the Exchequer Chamber and the judgment
             was affirmed. All these cases show that when the fault of the non-completion of
             the contract can properly be imputed to the party himself, and is the result of his
             own acts, or, as in this last case, could be set right by his acts, the disappointed
             purchaser has a right to recover damages as well as expenses…If the
             impossibility to perform the contract arises from some unanticipated difficulty of
             a legal sort in the perfecting of the title, it may well be that the innocent vendor
             may be excused from the payment of damages, for, as Mr. Justice Blackburn said
             in Lock v. Furze (1866) 1 C P 441, 453 “from the complicated nature of our law
             of real property, no man can be certain that he has a perfect title to his estate”.
             But when it is the consequence of his own negligence, or still worse, of his
             refusal to do what is necessary to be done in order to perform the contract, the
             vendee is entitled to damages. It is the vendor’s own wrong, and he ought to
             compensate the vendee whom he has made to suffer by it.

39.   The third party’s title is a bad title that might have been put right by a proper
      investigation of the plaintiff’s assertions, or an action for possession under the
      mortgage. Imagine a dubious footpath running across an open field, indicative of
      a possible right of way over land that a vendor is selling as mortgagee. Before
      entering the contract of sale a neighbouring landowner writes to say that he has an
      easement. The mortgagee ignores the assertion, does not tell the purchaser of the
      existence of the footpath or the assertion of the neighbour. Moreover, he does
      nothing to question or remove the defect. In fact, like in this case, he writes the
      neighbour and says that the sale will be subject to the easement. How can the
      mortgagee escape damages for loss of bargain? His duty is to convey the title
      with vacant possession, not to suppress information that the title is not in order
      and then hide behind the mortgagee covenant clause. The covenant in the sale
      agreement would work injustice if the courts robotically used it to excuse every
      default by a mortgagee. It is contrary to all the first principles of conveyancing.
      In my view the defendant is entitled to damages for loss of bargain.

40.   I am not minded to make an award for loss of profits for the aborted expansion of
      the grocery into the subject premises. The evidence of the defendant’s income tax
      returns is not conclusive enough as to what he might have earned, had he in fact
      expanded his grocery business. Does expansion mean he would have had two
      groceries? Or that he would have transferred its location from the adjoining

                                                                       Page 24 of 27
      property?   The evidence called for speculation and was undeveloped.             The
      defendant has however satisfied me of his loss of rental income, calculated
      annually at $20,000. The loss of annual rent over the period 1994 to 2007 is

41.   Mrs. Maharaj asked me to order damages for deceit but this was not a relief
      claimed on the pleadings. I therefore decline to make such an award although,
      had it been pleaded, I might have contemplated doing so. The defendant has
      never gone into possession and the damage for loss of bargain is adequate to
      compensate him.

42.   I have no reservation in ordering the third party to repay the purchase price. The
      third party has had use of the defendant’s money since 1993 and not until the eve
      of the trial made an offer to return it (without interest) notwithstanding its failure
      to deliver possession. To my mind this amounts to a total failure of consideration
      and the duty was cast on the third party to repay the purchase money, or, at the
      very least pay it into court where it would have earned interest. The defendant is
      entitled to the return of this money with compound interest from 28 July 1993 to
      date. In calculating the interest I have used the commercial interest rates over the
      period 28 July 1993 to 28 July 2007 that was supplied to the court by the third
      party. A schedule attached to Mrs. Maharaj’s submissions filed on 3 December
      2007 gives a year-by-year analysis of interest rates on the purchase price
      compounded during this period of which I approve. The total sum due for
      principal and interest in that period is $172,241.07 and interest will continue to
      run at the commercial rates compounded from 28 July 2007 to date.

43.   I make no order for the repayment of the defendant’s conveyancing costs as these,
      properly, are special damages, which ought to have been pleaded but were not.

44.   In my view, the defendant is entitled to be fully indemnified by the third party for
      the judgment debt of $25,000 together with the costs ordered in favour of the

                                                                   Page 25 of 27
      plaintiff. The third party or its attorneys ought to have warned the defendant of
      the danger of entering and taking possession instead of causing the bailiff to
      attend and evict the plaintiff. In fact, the third party’s attorneys’ letter to Hobsons
      of 23 August 1993 specifically stated that on the basis of their investigations the
      plaintiff’s tenancy did not exist. When I look at the conduct of the third party I do
      not recognize any element of caution or restraint, notwithstanding the threat of
      legal action, leaving the defendant with the legitimate impression that he had its
      full support.

45.   In relation to the third party proceedings, the general rule is that the defendant is
      entitled to recover his costs on a party and party basis.

46.   In all the circumstances I make the following orders:
         (1)   There will be judgment for the defendant against the third party.
         (2)   The agreement for sale dated 16 July 1993 and the unregistered
               memorandum of transfer executed thereunder is hereby rescinded.
         (3)   The third party is ordered to pay the defendant the sum of $172,241.07
               representing repayment of the purchase price together with interest from
               28 July 1993 to 28 July 2007 and continuing at the current rate of
               interest to today’s date.
         (4)   The third party is ordered to indemnify the defendant against all liability
               to the plaintiff arising out of the order made on 28 July 2006 as follows:
               (a)    the sum of $25,000 representing the judgment for damages for
                      trespass; and
               (b)    the costs ordered to be paid by the defendant to the plaintiff with
                      liberty to the defendant, after the taxation and payment of the
                      costs, to enter judgment against the third party for the repayment of
                      such costs.
         (5)   The third party is ordered to pay the defendant his costs incurred in
               defending the plaintiff’s claim on a solicitor and client basis, certified fit
               for Senior Counsel.

                                                                    Page 26 of 27
          (6)    The third party is ordered to pay the defendant the sum of $260,000 as
                 damages for loss of bargain, rents and profits.
          (7)    The third party shall pay the costs of the third party proceedings on a
                 solicitor and client basis certified fit for Senior Counsel.

James Christopher Aboud
Judge (Acting)

                                                                      Page 27 of 27