Angteeah v Bathfield and others

This appeal concerns the effect in Mauritian law upon a written agreement for the sale of leasehold land of the non-fulfilment of a requirement in the agreement for the obtaining of permission from the lessor for the transfer of the leasehold rights from the vendor to the purchaser. The trial judge thought that the agreement remained enforceable once the vendor exchanged her lease for a fresh lease which contained no restriction upon assignment. The Court of Appeal held, to the contrary, that the agreement lapsed because the requirement for the obtaining of the lessor’s consent was a “condition suspensive” which had not been satisfied, and that the new lease obtained by the vendor conferred different rights from those which she had agreed to transfer to the purchaser.

The outcome of the appeal turns on the application of well-settled principles of Mauritian law to the particular facts, which the Board will now summarise.

The first respondent Ms Sylvia Bathfield was in 2006 the leasehold owner of land and a building thereon known as Lot 1, Pas Géométriques, The Vale, Mauritius (“the Property”), on the terms of a 20 year lease from the government of Mauritius expiring on 20 December 2013. Article 5A of the lease provided that the lessee had to seek the express written authorisation of the lessor prior to assigning her interest under the lease.

By a written agreement, duly notarised and made on 18 April 2006 (“the Sale Agreement”) Ms Bathfield agreed to sell the Property to the appellant Ms Mala Devi Angteeah for the sum of Rs 11,500,000. The Sale Agreement was written in French. The summary of its relevant terms which follows uses an agreed translation.

Under the heading “PRICE” the purchase price of Rs 11,500,000 was apportioned as to Rs 5,000,000 for the “rights to the lease” and Rs 6,500,000 for the existing building, and recorded the payment by the purchaser of Rs 100,000 upon the making of the Sale Agreement.

Under the heading “CONDITIONS” the Sale Agreement provided as follows:

The parties duly applied to the Ministry for permission for the assignment of the lease to the appellant. Although the parties’ notary Mr Leblanc later gave evidence that neither he nor his father (also a notary) could ever recall such an application for permission being refused, it was, in fact, never forthcoming in the present case. This was, in summary, because the government was at that time conducting a review of its leased land, including the Property, which led to a decision that, rather than permit assignments of leases such as the lease of the Property, it would, instead, offer leaseholders an option to take a much longer lease (in this case for 60 years) at a higher rent and for a premium, on terms which permitted free assignment by the lessee without the need to seek permission.

Having become aware of this development, the first respondent wrote to Mr Leblanc on 13June 2006, in the following terms:

In about February 2007, no permission having been forthcoming from the Ministry, both the appellant and the first respondent together visited the Ministry’s offices to enquire as to the status of their application for permission to assign. They were told that the matter would be resolved within three or four weeks.

On 19 May 2007 the Ministry made a written offer to the first respondent of an option to take a new lease of the Property for a term of 60 years at a premium of Rs 1,500,000 (“the First Option”), sending a copy to the notary.

By a letter dated 29 May 2007 the notary duly informed the first respondent of the First Option, and sought to arrange an appointment with her to “determine the procedure to follow in order to materialise and finalise the above-mentioned agreement” (English translation). The letter continued (in translation) as follows:

It does not appear what, if any, response the first respondent made to this letter, but it is clear that the sum of Rs 5,000,000 was not paid, the appellant was not let into occupation of the Property, and the first respondent did not exercise the First Option. To the contrary, it appears that, by this time, the first respondent had sublet the property to the second respondent, Mr Bourgeois, because the appellant discovered him carrying out works to the building on the Property. This was the casus belli which led to these proceedings, which began with the appellant’s application for an interim injunction, granted on 3 July 2007, restraining the first respondent from disposing of the Property and the second respondent from carrying out works thereon. The appellant thereafter commenced formal proceedings in October 2007 seeking a declaration that she was the lawful owner of the Property, permanent injunctions in the form of the interim relief already obtained, damages, and an order directing the first respondent to sign a deed of sale, upon payment of the balance of the purchase price.

In November 2007 the Ministry sent a further option (“the Second Option”) for a new lease to the first respondent, for acceptance until 22 May 2008, thereby revoking the First Option. After obtaining one or more extensions of time under the Second Option, in December 2010 the first respondent was granted a new 60-year lease of the Property by the Ministry, on terms which permitted assignment without the need to seek permission.

The law governing the sale and purchase of land in Mauritius is largely governed by the Mauritian Civil Code, with some amplification from decided cases in the Mauritian courts. The Mauritian Civil Code is largely based on the French Civil Code.

The general rule is that a written agreement for the sale and purchase of land in Mauritius, which sufficiently identifies the land to be sold and the price, operates as an immediate transfer of ownership. This is reflected in article 1589 of the Civil Code, which provides (in translation) that:

This general rule is subject to any common intention of the parties to the contrary, to be gathered from the sale agreement. An example of such a contrary intention is where the obligation to sell is contracted subject to a suspensive condition, in French a “condition suspensive”. This is reflected in article 1181 of the Civil Code which provides (in translation) that:

A condition suspensive is to be contrasted with a “terme suspensif”. Article 1185 of the Civil Code provides that a terme differs from a condition in that it does not suspend the existence of the obligation, but only delays its performance. An example of a terme suspensif is where performance is stated to be conditional upon the happening of a future but certain event, such as the death of a named person.

An agreement for the sale of land which contains a condition suspensive may or may not contain express provision requiring satisfaction of the condition within a stated time. Both these alternatives are dealt with in article 1176 of the Civil Code which provides (in translation) that:

Read literally, this provision might appear to suggest that a contract with no time limit for the satisfaction of a condition suspensive could continue indefinitely, but the parties in their submission to the Board, and both the courts below, were in agreement that this was not so. The judge described such an outcome as “preposterous”, and the Board agrees.

A decision of the Cour d’Appel of Montpellier on 23 June 1948 noted in Dalloz (1948), at note 543, suggests that where a condition suspensive consists of the obtaining of an authorisation from the authorities, with no express time limit for its satisfaction, the parties may treat the condition as having become impossible once a normal and sufficient time to obtain that authorisation has elapsed without it being obtained. This was a decision which may be assumed to have been made under broadly equivalent provisions of the French Civil Code.

In Nouvelle Société du Tamarind Falls v Three FeathersLtd (1977) MR 107 the parties made a contract for sale of part of the vendor’s land in December 1972, the completion of which required a morcellement consent from government. Treating consent as a formality, the purchaser was allowed into immediate possession. Consent was formally sought in January 1974. No consent being forthcoming, in June 1975 the vendor began proceedings to recover possession of the property, upon the basis that the agreement for sale had lapsed due to the non-fulfilment of the condition suspensive constituted by the requirement to obtain morcellement consent. Sometime after the commencement of proceedings, in June 1976, consent was formally refused. Applying the Montpellier case (among others) the court held that the sale agreement had indeed lapsed, not merely in 1976 but prior to the commencement of proceedings in 1975.

The Board is satisfied, notwithstanding the literal terms of article 1176, that there will readily be implied into a Mauritian contract for the sale of land subject to a condition suspensive a provision that satisfaction of the condition will be deemed to be impossible if it has not been satisfied within a reasonable time, in the absence of any express provision as to time for the satisfaction of that condition. In particular, the Board rejects the submission by Mr Gavin Glover SC for the appellant that, in such a situation, the agreement will not lapse until a party has obtained a declaration from the court to the effect that a reasonable time has passed without satisfaction of the condition. This is, in particular, reflected in the court’s conclusion in the Tamarind Falls case, expressed as follows:

In the Board’s view, to require a party to obtain a declaration before treating a condition suspensive as incapable of being satisfied after the elapse of a reasonable time for its satisfaction, would be a recipe for expensive litigation, in circumstances where the parties are to be treated as having contracted that their agreement for sale was to lapse in such an event.

The first question is whether the requirement in the Sale Agreement to obtain consent to the assignment of the lease was a condition suspensive or a terme suspensif. In the Board’s view, it was plainly a condition rather than a term. The grant of permission by the Ministry was plainly an uncertain rather than certain future event, however unlikely a refusal may have been regarded by the notary. Permission was, in fact, never obtained for the assignment of the then existing 20-year lease. Furthermore, the language of the Sale Agreement provided in the clearest terms for the subordination of the transfer of ownership of the Property to the receipt of the permission from the Ministry.

The second question is whether the Sale Agreement lapsed due to the non-fulfilment of the condition suspensive, so that the first respondent was relieved from the obligation to transfer the Property to the appellant and if so, when. The Sale Agreement contained an express time limit for the obtaining of permission upon the expiry of which the purchaser could treat the sale as having lapsed, but no express time limit enabling the vendor to do the same. It follows from the foregoing analysis of the law that the vendor could treat the sale as having lapsed if permission to assign was not forthcoming within a reasonable time. There is no suggestion that the vendor did anything to impede the grant of permission by the Ministry.

The trial judge appears to have thought that the condition constituted by the obtaining of the Ministry’s permission to assign remained capable of fulfilment until it became irrelevant upon the grant of the new 60-year lease, under the Second Option, as late as December 2010. By contrast the Court of Appeal concluded that consent to the assignment of the 20 year lease was never going to be obtained once the government had changed its policy in favour of offering options for new, longer, leases, which the available evidence demonstrated had occurred by May 2007 at the latest, when the First Option was offered to the first respondent.

Mr Glover submitted that this was a factual question upon which the Court of Appeal should not have departed from the conclusion of the trial judge. But the trial judge’s analysis was undermined, in the Board’s view, by two errors of law. First, the judge treated the requirement for the Ministry’s permission as a terme suspensif rather than as a condition suspensive. For the reasons already given, this was plainly wrong. Secondly, the trial judge appears to have thought that the surrender of the 20 year lease in return for the grant of a new 60 year lease which did not require permission for assignment was a means whereby the term or condition might either be satisfied or treated as dispensed with. Again, in the Board’s view, that cannot be right. This is because, as the Court of Appeal observed, the subject matter of the Sale Agreement included the assignment of the modest unexpired residue of the existing 20 year lease (which could not be further assigned without Ministerial consent) rather than a new 60 year lease, at a different rent and with no restriction upon assignment. Furthermore, since the vendor needed to pay a premium of Rs 1,500,000 to obtain the new lease, which the Sale Agreement did not require her to pay, this reduced by the same amount the price which she was to obtain from the completion of the sale.

It follows in the Board’s view that the Court of Appeal was entitled to re-examine the facts upon a correct application of the relevant law, and entitled to conclude, as it did, that the Sale Agreement lapsed due to the non-fulfilment of the condition suspensive by the time when these proceedings were commenced.

The Board has considered whether the Sale Agreement was saved by an agreed variation which substituted the requirement for the Ministry’s consent to the assignment of the existing 20 year lease with the obtaining of a new 60 year lease by the exercise of the First (or Second) Option, and its assignment to the appellant, so as to confer upon her leasehold ownership of the Property, with the premium being paid to the Ministry out of a further advance of Rs 5,000,000 on account of the purchase price. This is, in substance, what the notary told the first respondent that the appellant had told him had been agreed between the parties as a solution to the difficulty in obtaining consent from the Ministry, in his letter dated 29 May 2007, in the extract quoted above. In the Board’s view, this solution to the appellant’s difficulties faces insuperable obstacles.

First, the notary’s letter described what can have been no more than an oral arrangement, rather than the substantial variation of the Sale Agreement which would have needed to have been made with due formality. Secondly, if that variation had been duly made, the first step in its performance would have been the payment of a further Rs 5,000,000 by the appellant to the first respondent in part-payment of the purchase price, which never occurred. Nor was the appellant let into possession. Thirdly, no such variation of the Sale Agreement was ever pleaded or relied upon by the appellant in the courts below.

It follows from the above analysis that this appeal must be dismissed. The Board notes in passing that a large number of procedural points were raised in the appellant’s grounds of appeal and printed case, and traversed at length in the first respondent’s case. At a late stage the Board was informed that, sensibly in its view, those matters were not to be pursued at the hearing of the appeal. Accordingly the Board finds it unnecessary to deal with them, save to conclude that they would, even if pursued, have been of no avail to the appellant.