-has to repay $400m
On October 28, Justice Nareshwar Harnanan ruled in favour of National Hardware (Guyana) Limited in a case it brought against Edward B. Beharry and Company Ltd over a soured land deal in portions of Plantations Liliendaal and Pattensen on the East Coast of Demerara.
The judge ruled that National Hardware had validly rescinded the
Agreement of Sale dated 9 August 2012 between itself and Edward B Beharry
upon acceptance of the latter’s repudiatory breach by way of letter dated 7 August 2013.
The judge however found that National Hardware’s claim against Edward B. Beharry
for damages for trespass to land is premature and is dismissed.
A permanent injunction was granted restraining Edward B. Beharry & Company
Limited from entering upon, occupying, constructing upon or otherwise
committing any acts of trespass upon the lands described in the Agreement of
Sale dated 9 August 2012.
The judge also said that National Hardware shall repay Edward B. Beharry &
Company Limited the sum of $400,000,000 being the part-payment of the purchase price made pursuant to the Agreement of Sale dated 31 January 2012 on or before 31 December 2026;
Edward B. Beharry & Company Limited’s counterclaim was dismissed and
it will have to pay National Hardware costs fixed in the sum of $1,000,000
on or before 31 December 2026.
The evidence of Claude Deygoo [also known as Eddy Boyer] provided background to the case. Deygoo averred that in or around 2009, he became aware of an offer to tender for undeveloped property in the Liliendaal area by the National Industrial and Commercial Investments Limited (NICIL). Deygoo succeeded in the tender process and, on 28 December 2009, contracted to purchase the property from NICIL for $598,659,398, with a deposit of $58 million.
He further averred that the contract required him to develop the property within five years. According to Deygoo, around mid-2010, to complete the purchase of Plot LP and
commence development, National Hardware borrowed $750,000,000 from the Guyana Bank for Trade and Industry Limited, as well as $200,000,000 from private lenders.
He deposed that on 9 May 2011, National Hardware became the transported owners of Plot LP vide Transport No. 760 of 2011.
He testified that at the time of purchase, Plot LP was entirely undeveloped, containing no residential drains, roadways, water connections or electricity. Deygoo averred that National Hardware intended to develop Plot LP as a residential housing scheme. He deposed that development would take several years and that he hoped to raise the necessary funds through the pre-construction sale of portions of the property. Deygoo said that by mid-2011, National Hardware’s finances were strained and required additional capital to continue developing Plot LP. His testimony is that he sought to sell the undeveloped portion of the property to a purchaser who would be able to promptly take up transport and pay. According to Deygoo, National Hardware intended to use the proceeds to fund further development and reduce its outstanding borrowing.
Deygoo testified that, in or around late 2011, Rabindranauth Beharry, contacted
him on behalf of Edward B Beharry and expressed interest in purchasing part of Plot LP.
Following negotiations, Deygoo averred that he offered to sell approximately 14.079
acres. He stated that he repeatedly explained to Rabindranauth Beharry that the
plaintiff needed the purchase money within four months to continue development.
According to Deygoo, Rabindranauth Beharry acknowledged that need and
assured him that the defendant would pay the balance in a timely manner.
According to Deygoo, the defendant requested changes to the layout of the proposed
development to accommodate its purchase. These included amendments to the extant plan and changes affecting roads, drainage, water supply and electricity infrastructure. He averred that the plaintiff agreed to make those changes and incurred expenses in doing so.
Deygoo deposed that the parties entered into the First Agreement on 31 January
2012. 10 He further deposed that it concerned 14.079 acres of Plot LP and provided for a purchase price of $495,085,500. Of that sum, $400 million was payable to Guyana Bank for Trade and Industry Limited upon signing, and the balance was payable upon passing of transport. He emphasised that the First Agreement provided that transport was to be passed within four months and that time was of the essence.
Deygoo testified that the defendant paid the $400 million upon signing and was given
possession of the land. As the deposit was paid to the bank, he said that the plaintiff
expected to rely on the balance of the purchase price to advance the infrastructure works.
Additional portions
Deygoo further said that around 2012, Rabindranauth Beharry expressed interest in purchasing additional portions of Plot LP. He said that he extended the time for completion under the First Agreement while the parties negotiated a further agreement. According to Deygoo, he continued to explain the plaintiff’s need for prompt payment.
Deygoo’s evidence is that the parties entered the Subsequent Agreement on 9 August
2012, which was intended to supersede the First Agreement and included additional
land. Deygoo said that the Subsequent Agreement stated a purchase price of
$523,404,000 but acknowledged that $400 million had already been paid, and provided
that the balance of 123,404,000 was to be paid on passing transport. It required the
defendant to pay VAT of $ 83,744,640 to the Guyana Revenue Authority. Transport was
to be passed within four months, and time was stated to be of the essence. According to
Deygoo, the total sum inclusive of VAT was due to the plaintiff on or before 9
December 2012.
Further background to the deal was contained in the testimony of Thorsten Strand for Edward B Beharry. He told the court that in or around August 2011, negotiations took place at Rabindranauth Beharry’s residence in Nando Gardens. He explained that no notes were taken during these negotiations but identified himself, Rabindranauth Beharry, Anjuli Beharry-Stand, Anand Beharry, Suresh Beharry and Paul Cheong
as all representing the defendant and Claude Deygoo and Nicholas Deygoo as
representing the plaintiff. He deposed that the agreed price for the portion of Plot LP was discounted compared to what the sellers expected. He averred that the land agreed to be purchased covered close to 50 planned house lots and that, in selling such a large estate without associated estate development, the vendor had considerable advantages. He further averred that these advantages reduced the seller’s need to invest in basic infrastructure, which was reflected in the selling price.
Strand deposed that at the time of the First Agreement, and leading to the signing of
the Subsequent Agreement, the seller was extremely non-responsive.
Justice Harnanan on the examination of the evidence said that he found that the term regarding passing of transport and payment of purchase price being elevated to a condition of the Subsequent Agreement due to the Time of the Essence Clause means that where Edward B Beharry breached them, such conduct was
repudiatory, entitling National Hardware to elect to rescind, which was properly done
He said that on 8 July 2013, the plaintiff sent a letter to the defendant requesting the immediate passing of transport, which the Subsequent Agreement attached the payment of the outstanding balance to. At that point, transport was ripe for passing because it was advertised in the Official Gazette on 26 January 2013. By its letter dated 11 July 2013, the judge said that Edward B Beharry continued to withhold completion pending developmental works and proposed undertaking works itself and deducting their cost from the outstanding balance.
“The defendant has not established that the alleged defaults entitled it to withhold completion or make the proposed deduction. Its continued insistence on those requirements, coupled with its sustained failure to pay the balance and take up transport despite the plaintiff’s demand, showed an unwillingness to complete on the agreed terms and amounted to a breach of the condition.
“I therefore find that its breach of the condition amounted to repudiation of the
Subsequent Agreement, which the plaintiff was entitled to, and which it accepted by
its letter dated 7 August 2013”, the judge said.
On the question of the $400m paid by Edward B Beharry, the judge said that under the first agreement that figure represented approximately 81% of the purchase price of $495,085,500. Under the subsequent agreement, which provided for the acquisition of additional parcels of land, that payment was carried forward against the increased purchase price of $523,404,000, leaving a payable balance of $123,404,000 upon the passing of transport within the specified time. At that stage, the payment therefore represented approximately 76% of the revised purchase price.
“Its substantial portion, together with the absence of any express designation of the sum as security for performance or any provision for its forfeiture, strongly supports its characterisation as part payment. Reading the payment provision and the Subsequent Agreement as a whole, I find that the $400,000,000 represented a substantial part payment toward the purchase price and not a deposit provided as security for the sale”, the judge said.
He added: “Consequently, although the purchaser had failed to pay the outstanding sum within a reasonable time and was responsible for the non-completion of the sale, the court held that the vendor could not retain the part payment.
“Applying that principle to the matter at bar, the defendant’s repudiatory breach entitled
the plaintiff to rescind the Subsequent Agreement, but not to forfeit the $400,000,000 paid towards the purchase price. The plaintiff’s repeated offers of a full refund were consistent with that legal consequence. Accordingly, the plaintiff must repay the defendant the sum of $400,000,000”.
National Hardware was represented by Devindra Kissoon, Natasha Vieira and Abhimanyu Dev.
Edward B. Beharry and Company was represented by Edward Luckhoo SC and Robin Stoby SC.
Discussion