IN THE SUPREME COURT OF GRENADA
AND THE WEST INDIES ASSOCIATED STATES
HIGH COURT OF JUSTICE
SUIT NO. GDAHCV 2010/0252
BRUCE JOHN McNESS
SUZANNE VICTORIA McNESS
Mr. Douglas Mendes SC, instructed by Delany & Associates for the Claimants
Dr. Francis Alexis QC, instructed by Messrs Joseph & Joseph for the Defendant
2013: October 7,8 and 9
2014: February 26
 MOHAMMED, J.: The Claimants are a professional trustee and a barrister-at-law
respectively who both reside in London, England. The Defendant is a private
company which invests in real estate, real estate development and tourism
development in Grenada. They entered into an agreement on 14th November
2007, the Standard Lot Purchase Agreement (“the Agreement”) where the
Claimants agreed to purchase Villa 8 which forms part of the Defendant’s larger
acreage situate at Mt. Cinnamon Morne Rouge, St. George’s Grenada (“Mt.
Cinnamon”). By 25th February 2008 the Indenture was executed by the parties
whereby the Claimants became the owner of Villa 9 (“the Villa”), instead of Villa 8.
 In 2010 a disagreement arose between the parties on the interpretation of
Stipulation 4 in Schedule D of the Agreement (“ Stipulation 4”). Stipulation 4
“It is the intention of the Club proprietor to start construction or cause
construction to be started of a hotel at Mt. Cinnamon by the end of the third
quarter of 2008. At the option of the Purchaser the Vendor will repurchase
the Villa at The Purchase Price and pay legal costs capped at US $50,000.00
if no hotel has been commenced within two years or completed within five
years from the completion date.”
 As a result of this disagreement, the Claimants instituted the instant action against
the Defendant for specific performance of the Agreement; damages for breach of
contract in addition to specific performance, interest on the purchase price of US
$972,500.00 at the rate of 7.5% from the 13th April, 2010 until payment; costs and
any other relief.
 The Claimants interpretation of Stipulation 4 is the Defendant was supposed to
commence construction of a hotel by the end of the third quarter of 2008 and if it
failed to do so within two years of the Completion Date of 12th July, 2008 (“the
Completion Date”) they were entitled to exercise their option to call upon the
Defendant to repurchase the Villa upon the terms in Stipulation 4. The Claimants
called upon the Defendant to repurchase the Villa by notice dated 13th April, 2010
(“the First Notice”). The Defendant having failed to do so, the Claimants then
issued the notice dated 30th April, 2010 (“the Second Notice”) to the Defendant.
The Claimants are clear in their position that Stipulation 4 could not have intended
to refer to structures existing at the time of contracting since it would be
superfluous if it did.
 The Defendant has denied that it has failed to comply with Stipulation 4 of the
Agreement. Its position is based, on the laws of Grenada, and in particular the
Hotels Aid Act (“the Act”) it commenced construction and did build a hotel at Mt.
Cinnamon within two years of the Completion Date. It denies that there is a
binding obligation for it to repurchase the Villa pursuant to Stipulation 4. It
contends that the First Notice and Second Notice are void since it has not
breached the Agreement; the Agreement is unenforceable against the Defendant
as it terminates upon its completion since there is no expressed provision for
survival of Stipulation 4; and that the damages claimed by the Claimants are
unreasonable or not reasonably foreseeable.
 At the trial both Claimants gave evidence in support of their case. The Defendants
witnesses were Mr. Peter De Savary, director of the Defendant, Mr. Robin
Chapman, the Defendant’s attorney-at -law who was involved in the drafting of the
Agreement and Mr Russ Fielden, a former President of the Grenada Hospitality
and Tourism Association.
 The issues which arise for determination are:
(a) What is the applicable law for the interpretation of the Agreement?
(b) Does Stipulation 4 survive the Agreement?
(c) Did the Defendant fail to construct a hotel at Mt Cinnamon within the
meaning of Stipulation 4?
(d) Was there a binding obligation for the Defendant to repurchase the Villa
under Stipulation 4?
(e) Did the Defendant breach the Agreement by not immediately repurchasing
the Villa as demanded by the Claimants?
(f) Are the damages claimed by the Claimants reasonable or reasonably
(g) Whether interest is awardable and if so in what amount?
What is the applicable law for interpretation of the Agreement?
 Clause 25 of the Agreement provides that “This agreement shall be governed by
and construed in accordance with the laws of Grenada”. The Claimants contends
that the Agreement is a contract and since there is no statute governing the
construction of contracts in Grenada the appropriate law is the common law of
Grenada. The Defendant’s position is the word “construction” used in Stipulation 4
of the Agreement is to be interpreted within the meaning assigned to the Hotels
Aid Act1 (“The Act”) of Grenada. Section 2 of the Act defines “construct” as
“includes erect, repair, alter, reconstruct or extend”. The word “hotel” is defined to
mean “a building or group of buildings containing or intended to contain when
complete not less than ten bedrooms for the accommodation of guests for reward,
and includes the curtilage thereof and all structures within such curtilage, or any
other building or group of buildings accepted by the Minister to fill the purpose of
 I agree with Counsel for the Claimant that there is nothing in the Act which extends
its application to the interpretation of contracts. The Act’s application is limited to
hoteliers who are granted concessions and to persons who invest in and develop
the hotel industry in Grenada. The long title of the Act sets out the purpose of the
Act which is “An Act to encourage the hotel industry by granting certain relief in
respect of customs duties to persons who expend moneys upon the construction
or equipment of hotels in Grenada, and for connected purposes.” To facilitate this
mandate section 3 of the Act empowers the Minister to grant licences to “a person
desiring to construct or equip a hotel a licence to import free of customs duties, or
to purchase in Grenada subject to drawback of customs duties, such building
materials and articles of equipment for use in connection with the construction and
equipping of the hotel as may be specified in the licence”.
 I do not accept the Defendant’s submission that the word “construction” in
Stipulation 4 of the Agreement is to be given a purposive construction and given
the same meaning as the word “construct” in the Act . Section 16 of the Act
clearly provides that the provisions of the Act do not apply “to a hotel in respect of
which a licence has not been granted” and there was no evidence when the
1 Chapter 138
Defendant’s licence was obtained. In any event, if it was obtained after the
Agreement was executed by the parties the Act would be inapplicable and the
Defendant would not be able to rely on the meaning of the word “ construct” in the
 I therefore find that the applicable law for the interpretation of Stipulation 4 of the
Agreement is the common law of Grenada and not the Act.
Does Stipulation 4 survive the Agreement ?
 Clause 14 of the Agreement provides :
“14: SURVIVAL: Except to the extent that any provision hereof expressly
survives Completion, this agreement shall terminate upon Completion unless
earlier terminated as provided herein”.
 The Defendant contends that there is no expressed provision which makes
Stipulation 4 survive the Agreement and accordingly it terminated with the rest of
the agreement and is therefore unenforceable.
 The events set out in Stipulation 4 namely, the commencement of construction of
a hotel by the end of the third quarter of 2008 and the option by the Purchaser for
the Vendor to repurchase the Villa at the purchase price and pay legal costs
capped at US $50,000.00 if no hotel is commenced within two years or completed
within 5 years from the Completion date all concern matters beyond the
completion of the Agreement. In my view, this expressed intention concerning
matters beyond the completion of the Agreement is sufficient for the Court to
accept that even in the absence of any specific words stating that Stipulation 4
survived the Agreement, it is only reasonable to interpret Stipulation 4 as surviving
 I therefore find that Stipulaton 4 survives the Agreement.
Did the Defendant fail to construct a hotel at Mt. Cinnamon within the
meaning of Stipulation 4?
 The Claimants contend that the “hotel” referred to in Stipulation 4 is the one
depicted on a plan (“the Master Plan”) at Mt. Cinnamon, situated on Grand Anse
Beach, which they were provided when they were first introduced to Mt Cinnamon.
The Defendant’s position is it has built a hotel at Mt. Cinnamon which was opened
in July 2008. The hotel consists of the refurbishment of the buildings which existed
at the time of the completion of the Agreement i.e 12th April 2008, new buildings,
additional rooms and additional hotel facilities such as beach cabana, restaurant
and bar, integrated gift shop, spa, gym, tennis court, leisure building and yoga
 It was not in dispute that prior to 2006 there was a hotel at Mt. Cinnamon; it was
shut down sometime in or about April 2006, the same year the Defendant
purchased Mt. Cinnamon; at the time of the completion of the Agreement there
was no functioning hotel at Mt. Cinnamon; there is a functioning hotel at present
and there is no hotel on the beach at Grand Anse at Mt. Cinnamon. In order to
determine the meaning of Stipulation 4 the Court is obliged to ascertain the parties
intention at the time they executed the Agreement.
 While the position taken by the parties on the approach the Court must take in
interpreting Stipulation 4 are diametrically opposite, there was some consensus
on the law to be applied by the Court. The Claimants are of the view that the
background facts are relevant and material in ascertaining the parties intention.
The Defendant on the other hand, insists that the expressed exclusionary
provision at Clause 12 of the Agreement prevents the Court from examining any
information obtained by the Claimants during the negotiations and prior to the
execution of the Agreement in determining the intention of the parties.
 The Defendant pleaded in its Defence that it relies on the expressed exclusionary
Clause 12 of the Agreement which limits the material which the Claimants can rely
on in seeking to interpret any of the Clauses in the Agreement. Clause 12 of the
Agreement expressly provides:
“12. ENTIRE AGREEMENT: This agreement, together with all exhibits
referenced in this agreement and attached, embodies the entire agreement
between the parties and cannot be waived or amended except in a written
instrument signed by both partiesThe Purchaser agrees that the Purchaser
has not been induced by or relied upon any information, representation,
warranties or statements, whether oral or written, expressed or implied, made
by the Vendor or any person representing or purporting to represent not
expressly set forth or provided for in this agreement.”
 In Karsales (Harrow) Ltd v Wallis2 Denning LJ was of the view that a party who
has contracted to do one thing and does another has failed to perform his
contractual obligation and cannot be protected by the exclusionary clause3.
 I agree with the Defendant that Clause 12 is clear and unambiguous. However I
do not agree that Clause 12 shuts out the Claimants from relying on relevant
objective representations made prior to the execution of the Agreement since the
Claimant is contending that the Defendant has failed to perform its obligation
under the Agreement. In my view, in such circumstances, the Defendant cannot
now rely on Clause 12 to limit its liability.
 In construing Stipulation 4 the test which the Court must apply is “what the parties
using those words against the relevant background would reasonably have
understood to mean”. After reviewing the approach to be adopted by the Court
Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich
Building Society4 summarized the general rule as:
2  2 AllER 866 at 869
3 Karsales (Harrow) Ltd v Wallis  2 All ER 866
4 (1998) 1WLR 896 at pages 912-913
“ (1) Interpretation is the ascertainment of the meaning which the document would
convey to a reasonable person having all the background knowledge which
would reasonably have been available to the parties in the situation in which
they were at the time of the contract.
(2) The background was famously referred to by Lord Wilberforce as the “matrix
of fact”, but this phrase is, if anything, an understated description of what the
background may include. Subject to the requirement that it should have been
reasonably available to the parties and to the exception to be mentioned next,
it includes absolutely anything which would have affected the way in which the
language of the document would have been understood by a reasonable man.
(3) The law excludes from the admissible background the previous negotiations of
the parties and their declarations of subjective intent. They are admissible only
in an action for rectification. The law makes this distinction for reasons of
practical policy and, in this respect only, legal interpretation differs from the
way we would interpret utterances in ordinary life. The boundaries of this
exception are in some respects unclear. But this is not the occasion on which
to explore them.
(4) The meaning which a document (or any other utterance) would convey to a
reasonable man is not the same thing as the meaning of its words. The
meaning of words is a matter of dictionaries and grammars; the meaning is
what the parties using those words against the relevant background would
reasonably have been understood to mean. The background may not merely
enable the reasonable man to choose between the possible meanings of
words which are ambiguous but even (as occasionally happens in ordinary
life) to conclude that the parties must, for whatever reason, have used the
wrong words or synthax; see Manni Investments Co. Ltd v Eagle Star Life
Assuraance Co. Ltd  A.C. 749.
(5) The “rule” that words should be given their “ natural and ordinary meaning”
reflects the common sense proposition that we do not easily accept that
people have made linguistic mistakes, particulary in formal documents. On
the other hand, if one would nevertheless conclude from the background that
something must have gone wrong with the language, the law does not require
judges to attribute the parties an intention which they plainly could not have
had. Lord Diplock made this point more vigorously when he said in Antaios
Compania Naviera S.A. v Salen Rederierna A.B. A.C 191,201:
“ if detailed semantic and syntactical analysis of words in a commericial
contract is going to lead to a conclusion that flouts business
commonsense, it must yield to business commonsense.”
 While as a general rule previous negotiations between the parties are to be
excluded Lord Hoffman in Chartbrook Ltd v Persimmon Homes Ltd 5 drew a
distinction on the admissibility of such previous negotiations based on relevance of
the issue to be determined. In his view, all previous negotiations are potentially
relevant background but should only be excluded from consideration on the basis
that they are irrelevant to the issue to be determined by the Court. He summed out
the position as:
“I do… accept that it would not be inconsistent with the English objective
theory of contractual interpretation to admit evidence of previous
communications between the parties as part of the background which may
throw light upon what they meant by the language used. The general rule, as
I said in Bank of Credit and Commerce International SA v Ali  1 AC
251,269 is that there are no conceptual limits to what can properly be
regarded as background. Prima facie, therefore, the negotiations are
potentially relevant background. They may be inadmissible simply because
they are irrelevant to the question which the court has to decide, namely,
what the parties would reasonably be taken to have meant by the language
which they finally adopted to express their agreement. For the reasons given
by Lord Wilberforce, that will ususally be the case. But not always. In
exceptional cases, as Lord Nicholls argued, a rule that prior negotiations are
5 1 AC 1101 at para 33
always inadmissible will prevent the court from giving effect to what a
reasonable man in the position of the parties would have taken them to have
 The challenge which the Court faces in distinguishing between “objective facts”
and “other statements made during the course of negotiations” which would fall
into the excluded “subjective facts” was outlined by Lord Hoffman at para 38 in
“Whereas the surrounding circumstances are, by definition, objective facts,
which will usually be uncontroversial, statements in the course of precontractual
negotiations will be drenched in subjectivity and may, if oral, be
very much in dispute. It is often not easy to distinguish between those
statements which (if they were made at all) merely to reflect the aspirations of
one or other of the parties and those which embody at least a provisional
consensus which may throw light on the meaning of the contract which was
 In light of the leading authorities, in interpreting Stipulation 4 this Court must refrain
from interpreting the meaning of the words but rather strive to arrive at an
interpretation which a reasonable person with the objective background
information which the parties had at the time of contracting would have intended it
to mean. In doing so the Court must not attribute to the parties an intention which
they plainly could not have had.
 In my judgment the relevant objective background facts to ascertain the parties
intention at the time they executed the Agreement are: (a) the Defendant’s
agreement with the Government of Grenada which was executed on 11th January
2007 (“the January 2007 agreement”); (b) the Defendant’s application for planning
approvals from the Government of Grenada to develop Mt. Cinnamon; (c) the
Master Plan which was part of the Defendant’s application for planning approvals
and which was also given to Mrs. McNess; (d) the Brochure produced by the
Defendant to market Mt. Cinnamon which was also given to Mrs. McNess and; (e)
the emails between the parties and their solicitors.
 In the January 2007 agreement the Defendant’s intention at that time can be
gleaned from the preamble which states “The intention of the Developer (the
Defendant) is to construct and subsequently market for sale or lease residential
development comprising of apartments, townhouses and villas commercial and
retail offices and a hotel”. In Clause 3.1 Spice Land Trading undertook to
complete construction of “the hotel” no more than six years after the signing of the
January 2007 agreement. At paragraph 14 of Mr. De Savary’s witness statement
he confirmed that at the time of the January 2007 agreement the buildings at Mt.
Cinnamon were dilapidated and not habitable for a hotel purpose and he set out
developing the site including construction of a hotel within the meaning of the
January 2007 agreement, the laws of Grenada and the Hotel Aids Act. He stated
under cross-examination that in his business as a tourism/hotel/real estate
developer where he has 36 years experience, “refurbishment” of buildings amount
to “construction” and he started construction of a hotel at Mt. Cinnamon in late
2006 which he completed in 2008. The Court notes that based on the January
2007 agreement there is a clear distinction by the Defendant between the villas on
site and “the Hotel” which was to be construed.
 The Defendant’s application for planning approval was dated 23rd April, 2007
approximately one year before the completion of the Agreement. Outline
permission was granted on 3rd October, 2007. The application states that the
Defendant applied for approval for “the development of a Hotel & Condo
Apartments”. In that same application the Defendant acknowledged that “The site
is currently used for: (1) Hotel & Living accomodations (2) Restaurant & Bar
facilities”. On the last page of the application, reference is made to a Site Plan
which is to be attached. It was not disputed that this was the Master Plan which
was a large colour depiction of Mt Cinnamon which showed a “Luxury Hotel/Club
on Grand Anse Beach with all resort amenities” marked “I” on the Master Plan. On
the face of this application to the relevant authorities it is reasonable to assume
that the intention by the Defendant in April 2007 was to offer two different types of
accommodation at Mt. Cinnamon, Hotel on the beach and Condo Apartment.
 However Mr. De Savary’s evidence under cross-examination on the Defendant’s
stated intention as reflected in the said application was at best tenous and
inconsistent. He first stated that in the application for planning approval he may or
may not have been intending to develop a hotel. Then he said he could not
explain what “Hotel” is being referred to in the application for approval for “the
development of a Hotel”. Yet he later admitted that in part he was applying to the
authorities for permission to put a hotel on the beach which he called “ Hotel” as
depicted on the Master Plan but he then stated that the application for planning
approval for “Hotel and living accommodation” was an error.
 If I am to accept Mr. De Savary’s explanation that it was an error, then I have to
accept that the Defendant misled the relevant authorities in its application for
planning approval but there was no evidence presented by the Defendant to
indicate that it attempted to correct this error with the planning authorities such as
an amended application. Indeed there was no evidence to demonstrate that it was
an error since it was based on this very same approval that the Defendant
proceeded with the refurbishment of the buildings and additional contruction at Mt.
 I do not accept the weak explanation proffered by Mr De Savary that the
application for “Hotel and living accommodation” was an error. Mr De Savary
appeared to me to be a shrewd businessman with extensive experience in the
area of tourism/hotel/real estate development for the last 36 years. In my view,
any shrewd businessman who was about to undertake such an extensive project
would have taken all the appropriate steps to ensure that the proper application
was made in terms of the type of accommodation which the Defendant intended to
provide at Mt. Cinnamon.
 The Master Plan was given to Mrs. McNess in March-April 2007. According to
Mrs. McNess, Guy Gittens showed her the area on the beach which was
earmarked for the luxury hotel. He told her that the Defendant had begun
discussions with the Marriott Group and that as an owner of a villa she would have
access to the hotel and its up-market facilities. This was in part consistent with Mr.
De Savary’s evidence that the Claimants were informed by representatives from
the Defendant that it was in discussions withowners of hotel brands but that these
were only exploratory discussions. Mr. De Savary was adamant that his
representatives, Guy Gittens, Mark Scott and Robin Chapman all told him that they
did not represent the “precise nature of a hotel to be constructed” to the Claimants
but this was inconsistent with Mrs. McNess’ evidence that Guy Gittens showed her
the area on the beach which was earmarked for the luxury hotel. In the absence
of Mr. Gittens being present to refute Mrs. McNess’ assertion I accept Mrs.
McNess evidence. I cannot accept Mr. De Savary’s assertion since he simply was
not part of that conversation.
 Mrs. McNess stated that at the time the Agreement was executed, the word
“Hotel” in Stipulation 4 was not the exisiting structures at Mt. Cinnamon but the
construction of a new five star hotel situated on Grand Anse Beach as depicted
as “I” on the Master plan. Under cross examination she admitted that the words
“new hotel” were not stated in Stipulation 4 and that in the Agreement there is no
reference to two hotels. She acknowledged that there was a “Note” on the Master
Plan which stated “This master plan is for illustrative purposes and may be
modified as necessary” and in her interpretation of “modify” was small, positive
 Mr. De Savary acknowledged that the Claimants were given the Master Plan. At
paragraph 22 of his witness statement Mr. De Savary explained the purpose of the
plan which was “… to openly and clearly let buyers realize that the present
gardens would be sufficient to a building density in the future of some sort”.
However under cross-examination Mr. De Savary admitted that some of the
facilities which were stated on the plan such as the pavilion, gym, horticultural
shed, beach club, spa and restaurant were all built subsequently.
 I do not accept Mr. De Savary’s explanation for the purpose of the plan. In my
view, the purpose of the plan had to be more than Mr. De Savary’s explanation
since it was used as an important supporting document in the application to the
relevant authorities for planning approval and to market Mt. Cinnamon to
prospective buyers. It illustrated the proposed layout of Mt. Cinnamon, the types
and location of accommodation to be provided i.e villas, condominiums,
apartments, cottages and luxury hotel/club on Grand Anse Beach with all resort
amenities, fractional units for fractional ownership, the location of the gardens, fish
pond, pools, beach club, gym, tennis court, spa, restaurant and pool and the other
facilities which it intended to build and offer. It was not coincidental that the
construction of the said facilities were done just as illustrated on the Master Plan.
While I accept that the proviso to the Master Plan was clear and that it was subject
to modification, in my view the failure to construct a Hotel on the Grand Anse
beach at Mt Cinnamon was not just a modification but a substantial alteration to a
plan which was used by the Defendant to attract prospective purchasers.
 The Brochure given to Mrs. McNess contained a photograph of the buildings which
now comprise the hotel referred to by the Defendant. The Brochure contained a
plan of the site with the luxury hotel located on the beach. It referred to “21 turnkey
fully furnished villas and apartments” which were then available for sale, and
promised that purchasers would have available to them “all the benefits of the
resort facilitites including a hosts of recreational activities including beach
cabanas, boats, diving, snorkeling, tennis, gymnasium, spa treatments and a
private swimming pool and sun decks”. It also referred to a “trendy, indoor/outdoor
Italian style restaurant and bar” which would be at the purchaser’s disposal. It
promised that purchasers would also benefit from “a full management service and
the opportunity to enter their homes into a rental pool.” There was also listed all
the services and facilities which an owner would be provided including concierge
services and a business centre.
 Mr. De Savary admitted that the Brochure which was given to Mrs. McNess was
produced in 2007 to market Mt. Cinnamon. He stated that at the time the
Brochure was produced Mt. Cinnamon did not have facilities such as a gym, tennis
court or any structures on the beach. He confirmed that his original intention was
to renovate the buildings at Mt. Cinnamon, to sell and then walk away. His
intention was not to run a hotel comprising the existing villas, apartments,
swimming pool, reception area, tennis court and restaurant since he claimed that
in order for a facility to comprise a hotel the quality of everything on the property
had to be of a higher standard such as there had to be a 24 hour service, rental of
rooms for one day or a part of a day, intensive housekeeping, the provision of
toiletries which are not provided in a rental pool. He intended to provide a rental
unit programme under resort operations as opposed to a hotel. He stated that the
“we” and “we take care” stated in the Brochure were referring to whoever owned
Mt. Cinnamon and at the time he authorized that statement he was hoping that his
partner would be the Ritz/Carlton. He admitted that there are facilities in existence
at Mt. Cinnamon in 2013 which were not stated in the Brochure such as spa
treatment on beach, beach club, yoga and dance studio and beach lounges.
 In my view Mr. De Savary’s evidence was inconsistent and cannot be reconciled
with the information contained in the application for planning approval where it was
stated that the site was “currently” used as a hotel. I therefore do not accept Mr.
De Savary’s evidence that his intention when the Brochure was produced and
given to Mrs. McNess was not to run a hotel. Indeed I find that this was indeed his
 In an email dated 26th June, 2007 Mrs. McNess caused her solicitor to write to Mr
Robin Chapman, the Defendant’s solicitor requesting that a condition be included
in the Agreement that if the hotel was not opened in the next two years they would
have the option to sell the Villa back to the Defendant. According to Mrs. McNess
the basis for such a request was that a hotel at Mt. Cinnamon would make “her
investment all the more attractive”. Mr. Chapman responded by email dated 29th
June 2007 where he stated:
“ We can give no assurances as to the timing of the opening of the hotel. A
hotel is included in our plans. We are and have been in discussions with major
hotel operators known to us one of whom (Marriott/Ritz Carlton) operates on
our affliated property in the Bahamas. A hotel makes commercial sense and
that is your clients best assurance that there will be one. But we cannot
reasonably be expected to be subject to a put option within two years. There is
simply not enough time to build one. What we will do is at the option of the
Purchaser, repurchase the Villa and pay legal costs capped at US $50,000.00 if
no hotel has been commenced within two years or completed within 5 years.”
 However, Mr. Chapman’s position appeared to be different in paragraph 9 of his
witness statement where he stated:
“It is not usual to include such a clause in the Special Conditions as Stipulation
4 in our standard documents. No one else had it. But in this case, comfort was
required by the buyers and Mr. De Savary instructed me that based on the
ongoing, and anticipated construction on the site the company should
reasonably meet those expectations. The hotel would be like some other De
Savary hotels, partly old built” and “partly new built”.
 Under cross-examination, Mr. Chapman admitted that he received the instuctions
from Mr. De Savary before he wrote the 29th June, 2007 email since he was not
familiar with the activities on the site at Mt. Cinnamon. If I am to accept that Mr.
Chapman was working with instructions from Mr. De Savary before he dispatched
the 29th June, 2007 email to Mrs. McNess’ Solicitor, then I have to conclude that
since June 2007 when there was construction already going on at the site that it
was Mr. De Savary’s intention at that time to use the existing villas, reception
building, restaurant and other facilities for a hotel which once in operation would be
the hotel being referred to in Stipulation 4. It therefore follows that if this was the
the position then I must find that Mr. Chapman misled Mrs. McNess in his email
that the Defendant was going to construct a hotel on the beach which they were in
discussion with Marriott and which he did not think could be built in two years. In
my view if he was not referring to the hotel on the beach and he knew that
construction was ongoing in June 2007 then he would not have expressed
reservation about the time of two years to build the hotel.
 In subsequent emails the Defendant’s intention to build a hotel on the beach which
were separate and apart from the existing buildings was also evident. In a
response to a query from Mrs. McNess about a reference in the First Schedule to
the draft Standard Lot Agreement to “The Architectural Guidelines” which Mrs Mc
Ness had not seen, Mr. Chapman stated in his email dated 12th September 20076
“The Architectural Guidelines are not completed yet. Mark Scott (Director) is
drafting. They are not in point in the case of the Mount Cinnamon 21 units.
The units are already built. The development is mature.”
 Even in 2012, by an email dated 13th July, 20127 Mr. Mark Scott stated: “We have
always made it abundantly clear that the beach site would be developed, initially
when you purchased we were contemplating a 250 bedroom hotel.”
 It is clear from the January 2007 agreement, the application for planning approval,
the Master Plan, the Brochure and the emails between the parties and/or their
legal representatives that it was the Defendant’s intention to construct a new
building on the Grand Anse Beach which was to be used for the purpose of a
hotel. This structure was separate and apart from the refurbishment of the existing
structures at Mt. Cinnamon which from the aforesaid documents were intended to
be used as the villa hotel accommodation.
6 Document 31 of Claimants Bundle of Documents
7 SVM 1
 Even if I accept Mr. De Savary’s evidence that he started construction of a hotel at
Mt Cinnamon in late 2006 which he completed in 2008, I still have to agree with
the Claimants interpretation of Stipulation 4 because of the timeline established
from the evidence of Mr. De Savary. The Defendant agreed in Stipulation 4 to
commence construction of a hotel by the end of the third quarter of 2008, which
Mr. De Savary agreed under cross-examination to be September 2008. Therefore
it could not have been the same hotel which Mr. De Savary said he built and
opened in July 2008 because according to the term agreed to in Stipulation 4
construction of the hotel was supposed to start in September 2008. In my view,
this timeline points to the structure identified as “I” on the Master plan described as
“ Luxury Hotel/Club on Grand Anse Beach with all resort amenities”.
 I therefore find that Stipulation 4 meant that at the time of the execution of the
Agreement it was the Defendant’s intention to construct a hotel which was not from
the existing structures but a new building situated on the Grand Anse beach.
Was there a binding obligation for the Defendant to repurchase the Villa
under Stipulation 4 ?
 At paragraph 7 of the amended Statement of Claim the Claimants pleaded that the
binding obligation on the Defendants to repurchase the Villa upon the terms
mentioned in Stipulation 4 came into effect on 13th April, 2010 when the First
Notice was served on the Defendant. The completion date of the Agreement being
12th April, 2008. The material part of Stipulation 4 which deals with the obligation
by the Defendant to repurchase the villa is:
“… At the option of the Purchaser the Vendor will repurchase the Villa at The
Purchase Price and pay legal costs capped at US $50,000.00 if no hotel has
been commenced within two years or completed within 5 years from the
 Having determined that the Defendant failed to construct a hotel within the
meaning of Stipulation 4 of the Agreement, I have no difficulty in finding that upon
the receipt of the First Notice the Defendant was bound to repurchase the Villa
upon the terms mentioned in Stipulation 4.
Did the Defendant breach the Agreement by not immediately repurchasing
the Villa as demanded by the Claimants?
 It was not in dispute that upon receipt of the First Notice the Defendant did not
immediately repurchase the Villa. Even when the Defendant was served the
Second Notice which gave it twenty one days from the 30th April, 2010 to
repurchase the Villa it still failed to do so. I also find that the Defendant breached
the Agreement by not immediately repurchasing the Villa.
Are the damages claimed by the Claimants reasonable or reasonably
 The Claimants have claimed damages for breach of contract. They have pleaded
special damages for :
(a) Concierge charges representing management and maintenance fees in the
sum of $24,080.00 for management and internal maintenance in respect of
the Villa for the period June 2010 to September 2010 inclusive and
(b) Property taxes in the sum of EC $5,902.38 levied by the Government of
Grenada for the Villa for the years 2010 to 2011 and which continued to
accrue and billed annually.
(c) Common parts charges representing utilities and insurance charges for the
Villa and common areas and maintenance of common areas in the sum of
US $27,106.22 levied by Spice Land Trading Limited, pursuant to the
Agreement for the period June 2010 to the end of the third quarter of 2011
(d) Legal fees, stamp duty and charges paid pursuant to purchase of the Villa in
the sum of US $22,996.25.
(e) Bank commitment fees levied by RBTT in respect of the negotiating a
mortgage with the Bank for the acquisition of the Villa in the sum of
 In support of the aforesaid pleading, at paragraph 69 of Mrs. McNess witness
statement she sets out the maintenance charges for the period May to November
2010 as EC $8,928.63 and for January to March 2011 as EC $15,152.35. Mrs. Mc
Ness also stated that further charges as stated in an email dated 30th October,
2011 in the sum of $US 27,106.22 and the property taxes for 2010 and 2011 was
EC $2,951.19 for each year. In the closing submission filed by the Claimants they
ask that any charges and property taxes paid subsequent to the date of Mrs. Mc
Ness witness statement which was made in January 2011 also be awarded.
 The measure of damages to be awarded for a breach of contract was set out by
Justice Parke B in Robinson v Harman8 where he stated:
“ the rule of the common law is, that where a party sustains loss by reason of a
breach of contract, he is, so far as money can do it be placed in the same
situation, with respect to damages, as if the contract had been performed.”
 However this broad rule is subject to the rule of remoteness as set out in Hadley v
Baxendale9 which limits the amount of damages to a reasonable sum :
“ Where two parties have made a contract which one of them has broken, the
damages which the other party ought to receive in respect of such breach of
contract should be such as may fairly and reasonably be considered either
arising naturally, ie; accordingly to the usual course of things, from such breach
of contract itself, or such as may reasonably be supposed to have been in the
8 (1848) 1Ex Rep 850 at 855
9  9 Exch 341
contemplation of both parties, at the time they made the contract, as the
probable result of the breach of it.”
 I will now deal with each item of special damages claimed by the Claimants.
Under cross-examination Mrs. McNess admitted that her guests at Mt. Cinnamon
have used all except two of the facilities at Mt. Cinnamon since they are not part of
the rental pool. She stated that when the Claimants and guests are not in
residence they ensured that the Villa is maintained. She also reiterated that the
Claimants do not object to paying verifiable and accountable maintenance costs.
However she has not set out any sum which she deems to be verifiable and
 In my view the Claimants are not entitled to be compensated for the conceriege
charges and the common parts charges since the evidence of the Second
Claimant is the Claimants and their guests did enjoy some benefit. If they had paid
these charges and they failed to benefit then in my view they would have suffered
a loss. In this case I was not satisfied that the Claimants had proven that they had
suffered any loss with respect to these items.
 Similarly, I do not award the Claimants claim for property taxes since they have
continued to own, occupy and enjoy the benefits of the Villa during the period for
which they have claimed. I also agree with the Defendant that the claim for
property taxes is too remote from the breach of the Agreement to be awarded.
 The legal fees of US $22,996.25 as claimed is awarded since it is covered under
 The Bank commitment fees in the sum of $15,000.00 levied by RBTT on the
Claimants when they were negotiating the mortgage to acquire the Villa are not
awared. These fees were incurred by the Claimants while they were fulfilling their
obligation to complete the Agreement and is not linked to the breach of the
Agreement. In Galoo Ltd and Others v Bright Grahame Murray 10 Lord Justice
Gildwell stated at page 1369:
“…I do not understand how the acceptance of a loan can, itself, be described
as a loss causing damage. If anything it is a benefit to the borrower. Of course,
a loss may result from the use to which the loan monies are put, but no such
resultant loss is pleaded, and even if it were it might very well be difficult to
attribute it to BGM”.
Whether interest is awardable and if so in what amount?
 The rationale for the award of interest was enunciated by Lord Denning MR in
Jefford v Gee11 where he stated:
“Interest should not be awarded as compensation for the damage done. It
should be awarded to a Plaintiff for being kept out of money which ought to be
paid to him.”
 Having found that the Defendant had breached the Agreement the Court is
satisfied that interest is awardable on the damages to be paid by the Defendant to
 At paragraph 3 of the Claimants Amended Statement of Claim the Claimants
pleaded that : “the Claimants financed the said purchase in part by way of a loan
from the RBTT bank in Grenada which loan carries interest at the rate of 7.5% per
annum”. They have claimed interest at the rate of 7.5% per annum from 13th April,
2010 until payment on the purchase price of US $972,500.00. At paragraph 44 of
Mrs. McNess witness statement she explains that the Claimants took a mortgage
to purchase the Villa and the rate of interest on the repayment of the mortgage is
7.5% per annum.I do not agree with Counsel for the Defendant that the Claimants
have failed to specifically plead a special rate of interest. In my view they have
10  1 WLR 1360
11  1 All ER 1202 at 1208
specifically pleaded this special rate of interest claimed at paragraph 3 of the
amended Statement of Claim. Further, it is because of the Defendant’s breach of
the Agreement by failing to repurchase the Villa has resulted in the Claimants
having to continue to repay the loan at the pleaded rate of interest.
 In the circumstances, the Court awards interest as claimed which is 7.5% per
annum from the 13th April, 2010 until payment.
 The Defendant is to repurchase the villa at the price of US $ 972,500.00.
 The Defendant is to pay interest on the sum of US $972,500.00 at the rate of 7.5%
per annum from the 13th April, 2010 to the date of payment.
 The Defendant is to pay the Claimants legal fees, stamp duty and charges paid
pursuant to the purchase of the Villa in the sum of US $22,996.25.
 The Defendant to pay the Claimants prescribed costs to be calculated by the
Margaret Y. Mohammed
High Court Judge