Exchange of contracts for sale of land — Initiation of compulsory purchase procedure — Purchaser refusing to complete — Compulsory acquisition thereafter — Remedies open to vendor — Whether vendor entitled to specific performance — Whether vendor entitled to damages — Vendor’s appeal allowed
In July 1989 the respondent (“NSR”) agreed to buy and the appellant (“Johnson”) agreed to sell a piece of land in Barbados on which the purchaser had already paid a deposit. Contracts were exchanged and the completion date was set for September 30 1989. On September 7 1989 a notice under section 3 of the Land Acquisition Act (c228) was published initiating compulsory purchase procedure with regard to that land. Section 3 provided that: “whenever it appears to the Minister that any land is likely to be required for any purposes…a notification to that effect shall be published…”. The chief surveyor is thereupon authorised to enter the land for the purposes of a survey. By section 5, where the minister has decided that any land should be acquired, notification to that effect has to be published and “shall be conclusive evidence that the land is required…for public purposes …and shall vest absolutely in the Crown”. In October, the purchaser gave notice to the vendor purporting to rescind the agreement and commenced an action for the return of the deposit. The vendor, Johnson, counterclaimed for specific performance. Before the action came to trial a notice was published under section 5 under which the land vested in the Crown. At first instance the judge held that the court could give relief to neither vendor nor purchaser. Johnson appealed and the Court of Appeal of Barbados held that the section 3 notice did not by itself frustrate the contract but that NSR should neither forfeit the deposit nor pay damages. Counsel for Johnson argued, inter alia, that the service of the section 3 notice neither frustrated the contract nor rendered it impossible for the vendor to give vacant possession on the completion date.
Held The appeal was allowed.
1. On the conclusion of a contract for sale of land the risk passed to the purchaser who, unless there was specific provision to the contrary, had agreed to accept the normal risks incidental to land ownership. The risk of interference with land-owning rights by the Crown or by other statutory authorities, was always present.
2. Whenever such interference took place that did not mean that parties were discharged from their agreement.
3. However, because NSR had accepted the risk of interference, the questions then arose of (1) whether they had to accept the risk of not obtaining vacant possession and (2) whether the possession which the vendor was in a position to give on the completion date of September 30 1989 was something other than “vacant possession” within the contract’s meaning.
4. In the present case the Crown had no right to immediate possession on September 20 1989 and there was no certainty at that date that it would ever seek to acquire such a right.
5. With regard to the remedies available to the vendor, no case had been discovered for an order of specific performance of a contract of a sale land where the vendor was unable to convey the land at the trial date.
6. Thus the order for specific performance sought by Johnson would be refused but it was appropriate that they should receive an award of damages.
Michael Briggs QC, Elizabeth Jones and Barry Gale (instructed by Frere Cholmeley Bischoff) appeared for the appellant vendor; Richard McCombe QC, David Thompson and John Ford (instructed by Titmuss Sainer Dechert) appeared for the respondent purchaser.
