Chow v Bossy (7 of 2005) (7 of 2005) [2006] SCCA 19 (28 November 2006);







IN THE COURT OF APPEAL OF
SEYCHELLES



COURT OF CIVIL APPEAL







SCA
No: 7 of 2005




PAUL
CHOW
Appellant







vs







HEIRS JOSSELIN BOSSY


(represented
by the Executor, Me Hooper Hoareau)
Respondent



===========================================


Before:
Bwana,
Hodoul, Domah, JJA


Counsel:
Mr. Pardiwalla for the appellant



Mr. Ally
for the Respondent






Date
of Hearing:
16
November 2006


Date
of Judgment:
29
November 2006











JUDGMENT OF THE COURT







Domah, JA







[1] This
is a combined appeal and cross-appeal on the judgment of the Supreme
Court in a case where the appellant lessee is contesting
an order of
eviction against him from an immovable property leased by a deceased
owner, the original lessor. The learned Judge, after
hearing
evidence, rescinded the lease and put the respondent heirs into
possession. He also dismissed the counter-claim of the appellant
in
which the latter had claimed against the respondent heirs a sum of
money which he alleged the original lessor has collected from
part of
the property which had not been delivered, in derogation of the lease
agreement.







[2] The
relevant facts may be summarized as follows. The appellant had taken
a lease from one Josselin Bossy for a term of 90 years at
a rental of
SR 9, 000 per month. Following the death of Josselin Bossy, the
court-appointed executor sought to recover possession.
He applied to
the Court for a rescission order. The grounds he set forth were that
the appellant had (a) failed to pay rent due,
which amounted to R
434, 000; and (b) breached a purposive condition of the lease in that
he had not started any development therein.
The plea of the appellant
formed the basis of a counter claim by the appellant against the
respondents. The lessee claimed that
the lessor had never given him
exclusive possession of the whole of the property. Two of the houses
on the land had never been delivered
as such, in breach of the lease
agreement, from which the lessor had continued unlawfully to collect
rent which had reached the figure
of SR 576, 000 by November 2002.






[3]
In his judgment, the
learned Judge found the case for respondent proved that the
underlying purpose of the lease was for development
and that none
whatsoever had occurred since the date of the lease. In the absence
of a time specified within which the development
should have started,
the Learned Judge read into the contract a principle of reasonability
and decided that the reasonable time within
which the project should
have come off the ground was one year. He decided that since nothing
had taken place within that one-year
period, the contract was deemed
to have been rescinded a year from the date thereof. As regards the
counter-claim, he found that
it was based on a gentleman’s
agreement. He took the view that a gentleman’s agreement is not
recognized in the law of
Seychelles and, therefore, is not cognizable
before its courts. Accordingly, he dismissed the counter-claim.







[4]
There were in all five grounds of appeal as follows:








  1. the Learned Judge erred in
    dismissing the Appellant’s counter-claim in its entirely on
    the basis that there was no evidence
    on record to establish the
    claim of the Appellant, in the face of uncontested and admissible
    evidence on record to support the
    Appellant’s claim;









  1. the Learned Judge erred in finding
    that Clause 1 of the Lease Agreement imposed an obligation on the
    Appellant to develop the property,
    given that Clause 1, read
    together with other provisions of the Lease Agreement, shows that
    the Appellant was at liberty to develop
    or not to develop the
    property;













  1. the Learned Judge erred in applying
    Article 1135 of the Civil Code of Seychelles to the circumstances of
    this case and concluding
    that development of the property should
    have started within one year of the effective date of the Lease
    Agreement, contrary to
    the clear and unambiguous terms of the Lease
    Agreement;









  1. in any event, the Learned Judge
    erred in finding that the Appellant had breached his obligation
    under Clause 1 of the Lease Agreement
    as to development of the
    property;













  1. in granting rescission under
    Article 1184 of the Civil Code of Seychelles, the learned Judge did
    not exercise his discretion judiciously,
    given the evidence before
    him and considering the options available to him in law.








[5]
The ground in the
cross-appeal is basically a challenge of the fact that the
counter-claim was erroneously dismissed when there was
uncontested
and admissible evidence to warrant a successful claim. Accordingly,
the facts of the cross-appeal are integral to the
facts of the appeal
itself.







[6]
Upon our remarks,
learned Counsel dwelt rather on the relative strengths and weaknesses
of their respective positions. Learned Counsel
for appellant conceded
that his submission that a lease of 90 years granted for a rent of SR
9000 per month was for a purpose other
than development and without
any purpose whatsoever looked an odd proposition, to say the least.
On the other hand, learned counsel
for the respondent conceded that
in the absence of a rescission clause in the contract, a reasonable
notice should have been granted
to put the party against whom it was
sought under due notice. We commend both counsel for their
professional stand in the matter.







[7]
We shall deal with
each of grounds (a) and (e) on its own whereas we shall consider
grounds (b), (c) and (d) together.







[8]
Ground (a) relates to
the facts as found by the Judge. They are relevant also for the
counter-claim of the appellant. The argument
is that the original
lessor has not given exclusive possession of the property leased and
was collecting rent from the two houses,
such sums being used to set
off against the rent he himself owed to the lessor. The learned Judge
considered this arrangement between
them as a gentleman’s
agreement and dismissed it on that account.







[9]
It was open to him to the Learned Judge to treat it as a case of
mutual indulgence which parties entered into for the discharge
of
their respective contractual obligations under the contract. As it is
gentleman’s agreement does not become so when the
parties term
it so. On the facts, the evidence is that the rent payable by the
appellant was SR 9,000 and the rent collected from
the two houses by
the lessor was SR 8,000. The likelihood of one canceling the other
was such that we cannot say that the finding
and conclusion of fact
on the matter by the learned Judge was perverse. This is the more
obvious when one takes into account that
the appellant’s
version is that the original lessor would never properly account for
what he received from the two houses.
The evidence that, therefore,
existed in relation to the alleged transaction between the appellant
and a deceased lessor looked
tenuous in the final analysis. It cannot
be said, therefore, that the conclusions of the learned Judge when he
dismissed the counter-claim
were unwarranted, the more so when the
alleged pocketing was by the deceased lessor and the claim was
against the heirs.







[9]
This takes us to grounds (b), (c) and (d). They turn round the
crucial issue whether the parties had agreed that the agreement was
for the purposes of development. This involves the interpretation of
the intention of the parties to the contract as a whole.







[10]
In the case of
Wilmot &
Ors v. W&C. French (Seychelles) Ltd & Ors SLR 1972 144
,
in a dispute which arose as to whether in a contract of sale another
portion was or was not included in the transaction, the
interpretation
of the contract was in issue. The court held,
following French jurisprudence, that -







en premier lieu, le juge
doit tout d’abord rechercher qu’elle a
été
la commune intention des parties contractantes, conform
ément
aux r
ègles
d’interpr
étation
pos
ées
par les articles 1156 et suivants du pr
ésent
code …”







[11] Other
words, the judges have, in the first place, in their interpretation
of the contract, to construe what the common intention of
the parties
was. It is to be noted that this case translates “commune
intention” as real intention, a not very faithful
translation
of the jurisprudence on the matter. However, the more faithful
translation was provided in the case of
Barry
Lee Cook and Anor v Philip Lefrevre, 1982 SLR 416.







[12] On
this matter, the learned Judge found that the common intention of the
parties was for actual development of the property and not
for
optional development. That is borne out by the evidence, more
especially when the defendant himself explained that following
government policy and change in the law, the plans about raising
condominiums and chalets had stalled. The Lease Agreement in fact
provides that once the land were developed, the Appellant was to pay
the Respondent “10% of the total cost of the new buildings
development subject to a maximum of SR 200, 000 on any single
development.”







[13]
This leads us to the
next question whether a rescission clause could be read into the
contract which did not contain one.







[14]
Article 1184 of the Civil
Code of Seychelles

provides:







“A condition subsequent
shall always be implied in bilateral contracts in case either of the
parties does not perform his undertaking.”







[15]
That should answer the question. And as for the related question as
to the procedure to be followed in pursuing the remedy, the
article
could not be clearer. Rescission implied in contracts is not
available by operation of law but must be sought through court
proceedings:







In that case, the contract
shall not be rescinded by operation of the law.”





“Rescission must be
obtained through proceedings “ …….






[16]
On the above, one may conveniently refer to the case of
Phillips
v Vista Do Mar Ltd, 1973 SLR 394.
P
made an advance payment for certain time-bound constructions to V.
Following a delay in the work , P unilaterally terminated the
contract and denied V access to the site. It was held, inter alia,
that –







Rescission for failure by
a party to a bilateral contract is not automatic but must be
pronounced by the Court.”







[17]
Likewise, in the case of
Jumeau
v Anacoura & Anor 1978 SLR 180
,
the contract of a lease of land provided against the raising of any
permanent structure on it without express permission of the
lessor on
the pain of ipso facto rescission of the contract. Sauzier J, as he
then was, held that rescission of a contract for breach
of a
condition must normally be obtained through Court proceedings and the
Court has power to grant a delay for performance.









[18]
This obviously takes us to the issue of time and delay for
performance of contractual obligations. Article 184 end up by
saying:







“…
but the defendant may be granted time according to the
circumstances.”







[19]
The case of
Pyper v. Poole
& Anor 1976 SLR 224
,
the following may be cited from R
épertoire
Fuzier-Herman, Vo Condition No 99 –



Que lorsqu’il n’a
été
stipul
é
aucun d
élai
pour remplir une obligation de faire, il appartient aux tribunaux de
d
éterminer
le d
élai
dans lequel l’engagement sera
éxécuté,
en prenant en consid
ération
l’objet du contrat et l’intention commune des parties
contractantes …”







[20]
Where, however, a
term of a contract provides for rescission, such rescission takes
place by operation of law, but only after notification
to the party
in breach by the other party with a clear indication that the latter
intends to avail himself of the specific contractual
term. In the
case of
Jumeau v Anacoura
& Anor (supra),
Sauzier
J also held that any rescission by plaintiff on the ground of the
breach could only take effect from the date of a notice
given by the
plaintiff to the defendants to the effect that he was exercising his
right of rescission. Defendant, in that case was
given time to
demolish. He was then ordered to vacate at the expiry of such time.
We agree with the reasoning except for the order
to vacate in the
case which does not follow either his earlier logic or the law on the
matter inasmuch as the order for eviction
should have only occurred
in case of a failure to demolish and not coupled with an order to
demolish.











[21]
We agree with the submission of Mr Valabhji that in a matter of
ordering a rescission, the more so when a rescission clause is
not
inserted in a contract but read into it – as in the present
case - a court should exercise its power to rescind judiciously.
As
it is with a rescission order, so it is with the failure to observe
any contractual obligation. We endorse the view of E.E. Seaton,
C.J.
in the case of
Armand
Samson v. Noella Figaro & Ors and Noella Figaro v. Armand Samson
1983 SLR 68:







Both the law and the
fairness require that before bringing a claim for failure to perform
the obligations of a contract, the defaulter
should first be put
under notice of default and given a chance to fulfill his
obligation.”







[22]
In this case, it is
amply clear that the defendant was not given time. The learned Judge
not only read a rescission clause into the
contract – which was
permissible – but he also, relying on the provisions of article
1135, inserted a time factor into
it, which was also permissible.
What was not permissible, however, is that he imposed that the time
should start from the operative
date of the contract rather than from
the time of the order. That the court had no power to do. It was
neither the law nor fair
nor judicious to order the rescission of the
lease retrospectively. The appellant should have been given
prospective time to remedy
his breach.









[23]
It may well be that the learned Judge took into account the fact
that the appellant has barely done anything to exploit the premises
after the change of government policy and law related to foreign
exchange. In fact, the facts show that appellant’s interest
in
the property waned in course of time. No concrete step (pun
unintended) has been taken on the evidence since 1996. He did not
even maintain the house in which he lived in good repair.







[24]
As has been settled in the jurisprudence which has inspired the
Seychelles Code, it was open to the appellant to pray for some time
to execute his part of the bargain as it was open to the Court to
allow him that possibility:







“La
r
ésolution
demande est facultative par le juge – celui-ci disposant en la
mati
ère
d’un pouvoir souverain d’appr
éciation
quant
à
la gravit
é
de l’in
éxécution
et
à
son caract
ère
fautif …Il peut tenir compte d’une offre d’
éxécution
de d
ébiteur
faite en cours d’instance
(Req.
17 juillet 1923, D.P. 1923.1.240; civ. 17 mai 1954. Gaz. Pal.
1954.2.82)
ou accorder à
celui-ci un d
élai
(c. civ. Art. 1184, al.
3; v req. 16 mai 1933, Gaz. Pal. 1933.2.422)
ce
qui est une application de la r
ègle
d’apr
ès
laquelle le d
ébiteur
malhereux et de bonne foi peut obtenir un d
élai
de gr
âce
(c. civ. Art. 1244)
mais
ce d
élai
n’est pas renouvelable.” Encyclop
édie
Dalloz, Vol. III, Contrats et Obligations,
§
246.














[25]
We, accordingly, amend the judgment pronounced against the appellant
and give the appellant eighteen months from the date of judgment
to
comply with the condition of developing the leased premises, failing
which the lease shall be deemed to be rescinded by virtue
of this
judgment. We dismiss the cross-appeal for the reasons set out at
paragraph [8] and [9] above. With costs.

















…………………………………….



B.
DOMAH



JUSTICE OF APPEAL















I concur: …………………………………….



S.
J. BWANA



AG. PRESIDENT















I concur: …………………………………….



J.
M. HODOUL



JUSTICE OF APPEAL















Delivered on 29 November 2006,
Victoria, Seychelles







References:








  1. Wilmot & Ors v. W&C French
    1972 SLR 144;



  2. Phillip v. Vista Do Mar 1973 SLR
    394;



  3. Pyper Poole & Ors 1976 SLR 224;



  4. Jumeau v Anacoura & Ors 1978
    SLR 180;



  5. Barry Lee Cook v. Philip Lefevre
    SLR 1982;



  6. Arnend Samson v. Noella Figaro 1983
    SLR 68