The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

An Appeal Court justice this week backed calls by a Supreme Court counterpart for reforms to the Condominium Act that will remove potential obstacles to the resale of units in such complexes. 

Appeal justice Jon Isaacs, in a majority verdict involving the $4.1m purchase of a unit in Paradise Island’s One Ocean, agreed with Supreme Court judge, Loren Klein, that the Act must be changed so that “inconsistencies” between apartments and their description in the Declaration of Condominium to do not collapse sales agreements.

Referring to Justice Klein’s original ruling, which was upheld, he wrote: “The judge set out his view that perhaps it is time that the Act be revised to address matters such as the re-purchase of units and their inconsistencies with the description in the Declaration.... I join with the judge in expressing the hope that the issues confronted in this case are reviewed and addressed as soon as is practicable.”

Such reforms would need to be drafted by the Attorney General’s Office, approved by Cabinet and then brought to Parliament for debate and passage into law, with both the Supreme Court and now Court of Appeal asserting that it is a matter for the executive and legislative branches to remedy.

Justice Klein, in his original verdict, asserted that “only the Quieting Titles Act has been productive of greater mischief in the law of real property” than the Law of Property (Condominium) Act 1965. “The claim also illustrates the unique complications that can arise from transactions involving the peculiar legal estate of fee simple ownership of property in a multi-storey building,” he wrote in his judgment.

“It is apparent that the Condominium Act has not kept pace with the mischief which has been generated by some of its provisions. These difficulties are strikingly illustrated by transactions involving the sale (or resale) of units, which seemingly cast an onerous burden on a prospective purchaser to ascertain that the building and units comply with near exactitude to the Declaration and registered plan.

“It has been left for the courts to attempt to ameliorate some of these issues by resorting to common law and equitable principles on a case-by-case basis, which has not always produced a uniform approach. The time may well have come for there to be a review and revision of the Act benchmarked on other jurisdictions to address the unique issues that have developed regarding condominium title.

“It is noted, for example, that modern condominium legislation in Canada and elsewhere provide for what is called an ‘estoppel certificate’ to be provided by the (condominium) association to the purchaser of a resale unit, providing information in relation to the condominium and unit which creates an estoppel in favour of the purchaser, and removes some uncertainty out of the transaction.”

Appeal justice Isaacs’ backing came in a ruling where himself, along with appeal justice Stella Crane-Scott, upheld Justice Klein’s earlier verdict that Belitza Marling Sagaray Silva “was not entitled to avoid or rescind” her July 19, 2018, agreement to purchase penthouse 901 at Ocean Place for $4.1m or recover the $410,000 deposit that had been paid.

She had sought to withdraw from the deal amid fears that Replay Destinations (Bahamas), the developer, was unable to provide good title to the unit due to a “discrepancy of some 1,300-plus square feet between the penthouse’s actual size and what was recorded in the statutory Condominium Declaration containing the certified architectural drawings and building plans.

While “containing 6,165 square feet of living space..... the Declaration registered under the Condominium Act described it as comprising 4,801 square feet”. However, Replay viewed it as a blatant attempt to renege on the deal and refused to return the deposit.

Michael Scott KC, representing Sagaray Silva, argued before the Court of Appeal that Replay could not provide his client with good title because its 6,165 square feet encroached on common areas identified by the Declaration of Condominium. However, Raynard Rigby KC, acting for the developer, argued that such inconsistencies did not necessarily “invalidate a conveyance of the unit”.

Justice Klein found that “the parties got what they bargained for” in finding for Replay, and Appeal justice Isaacs found: “It would appear that the parties recognised and accepted that there may be inconsistencies between the area of the unit being sold and its unit entitlement, and the statutorily described unit as found in the declaration.

“It would seem odd that with the understanding that the unit was larger than described in even the amended Declaration, and the appellant nevertheless entering into the bargain to purchase the unit, that she could then seek to renege on that bargain based on that discrepancy.”

As for the size differences “annulling” the Declaration of Condominium, Appeal justice Isaacs wrote: “I agree with the judge that it could not have been the intention of Parliament to nullify a Declaration merely because a unit in the condominium that was being resold did not match the description contained in the original conveyance....

“In as much as I am satisfied that a valid conveyance can be created despite inconsistencies in the description of a unit, I am unable to agree with Mr Scott’s contention that the renovations to the unit, even if such renovations trespassed on common property, vitiated the efficacy of the validly created Declaration.”

He was backed by appeal justice Crane-Scott, who wrote that Sagaray Silva knew she was buying a unit larger than that set out in the Declaration of Condominium when she signed the sales agreement. “Both parties were (as the judge found) also aware that an amendment to the Declaration would at some stage be required to address the increased square footage of Unit 901 and to adjust its unit entitlement in the common property,” appeal justice Crane-Scott said.

However, Appeal Court president, Sir Michael Barnett, in a dissenting minority view argued that Replay should have been required to repay the deposit with interest. “At the time of the purchaser’s termination of the contract, the vendor could not deliver title to a unit of 6,000 square feet. Much of that square footage was part of the common property to which the vendor, Replay, did not have title,” he wrote. 

“The purchaser was, in my judgment, entitled to rescind the contract. The 2005 Declaration as amended did not give the vendor title to the 6,000 square feet. At least 1,000 square feet was common property under the 2008/2010 Declaration. The vendor could not have title to that property unless and until the Declaration was further amended, which had not happened at the time of the termination or even at the time of the trial.”