Court allows land sale breach claim where sellers waived time-of-payment terms and refused balance payment.

[*43] 1981 May 23

(PIKIS,P.D.C, GL.MICHAELIDES,D. J.)

IN THE DISTRICT COURT OF LARNACA

Tassos Droushiotis,

Plaintiff,

v.

Georghios Tchiaillis & Others,

Defendants,

(Action No. 1466/1979).

Contract - Sale of land - Time of payment of the essence of the contract - Waiver - Sellers assuring purchaser that he need not adhere to obligations regarding time of payment -They cannot be allowed to resile from such representations -Purchaser offering to pay balance on demand but after the time specified in the contract - Sellers refusing to accept payment - Liable to pay damages for breach of contract.

Estoppel - Equitable estoppel - Waiver.

Damages - Breach of contract for sale of land - Measure of damages.

A. Poetis, for the plaintiff.

T. Koumis with A. Karas, for the defendants

JUDGMENT

The judgment of the Court was delivered by:

PIKIS.P.D.C.: By virtue of a [*44] written agreement dated 29th May I978 (exhibit 2) the defendants agreed to sell to the plaintiff twelve donums out of a plot of sixty one donums, for £18,000.-, payable as follows :-

(a)£1,000.- upon or soon after execution;

(b)£9,000.- within 45 days; and

(c)the balance within five months after completion of payment of a sum of £10,000.-

The agreement stipulated that sums owing would attract interest at the rate of 6 per cent per annum.

The agreement provided that after payment of the amount of £10,000.- the plaintiff would be entitled to assume possession of the property. Lastly, the agreement

provided that the contract of the parties would cease to be valid (dhen tha ischii) in the event of failure on the part of the purchaser

to observe the terms of the agreement as to the payment of the purchase price.

The plaintiff paid by the end of January or early in February 1979, the sum of £Io,000.- that defendants accepted without raising any objection or reserving any rights they might have for the cancellation of the agreement.

Construing as best as we can the relevant provisions of the contract, notably paragraph ϒ(β), the agreement cast an obligation on the purchaser to pay the balance five months alter completion of payment of the basic initial instalment of £10,000.- [*45]

By two successive letters addressed to the agent of the plaintiff in Cyprus, dated 15th and 19th October, 1979 respectively, notably exhibits 3 and 4, the defendants purported to cancel the agreement for alleged failure on the part of the' plaintiff to comply with material terms of the agreement. In the defence such failure is specified to be the omission of plaintiff to comply with the terms of the agreement concerning payment, laid down in clause (ϒ) of the agreement. And they pray, by way of counterclaim, for a declaration that the agreement between the parties was validly rescinded. By his action plaintiff originally prayed for the specific performance of the agreement and alternatively damages for its breach. At the trial the plaintiff abandoned his claim to specific performance in the absence of evidence of registration of the agreement and generally compliance with the provisions of the sale of Land (Specific Performance) Law, Cap. 232, as amended by Laws 50/70 and 96/72. It is the case of plaintiff that defendants waived their right, because of their representations and conduct, to insist on the enforcement of the time clauses of the agreement with regard to the payment of the purchase price. In the contention of plaintiff the purported breach by the defendants was arbitrary and an act designed to free them from their obligations under the agreement because of the considerable rise in the value of the property that took place in the meantime.

It is the evidence of the plaintiff and his agent in Cyprus, Christos Arghyrides (P.W.3), that soon after [*46] execution of the agreement and on a number of subsequent occasions Mr. Ropas, the grandfather of the defendants, who to all outward appearances was their agent for the conclusion of the transaction and its execution told them that they could take their time in paying the purchase price and that the time of discharging their liabilities was a factor of no consideration. Mr. Ropas left the plaintiff with this impression as a result of a series of statements made immediately after conclusion of the agreement to the plaintiff and on a subsequent visit by Mr.

Ropas to plaintiff's parental home. In the evidence of plaintiff Mr. Ropas specifically told him that he need not worry about the time aspect of payment of the instalments of the purchase price. Mr. Ropas left, not only the plaintiff, but his agent as well with a similar impression for, as Mr. Arghyrides testified, Mr. Ropas/him that they had no immediate need of the money and that they were quite content in the meantime to cent per collect interest accruing at the rate of 6% per/annum as opposed to 4 to 4½ per cent, they were likely to get from other sources.

Mr. Ropas, although admitting paying a visit to the parental home of plaintiff, denied that he agreed to any extension of time for the payment of the purchase price or that he left plaintiff or his representative with such impression. On the' contrary he alleged that on a number of occasions he demanded payment of the balance, particularly after the payment of the ten thousand pounds, through the brother of plaintiff, namely Andreas Droushiotis (P.W.5) who had been named, apparently together with the agent of [*47] the plaintiff, as a person through whom the defendants could communicate with the plaintiff.

Andreas Droushiotis admitted meeting Mr. Ropas on several occasions but contrary to the evidence of Mr. Ropas he stated that on no occasion prior to early September 1979 did Mr. Ropas demand payment of the balance. And such balance was, in his evidence, tendered shortly afterwards. Not only Mr. Ropas did not press for payment but he was making inquiries whether plaintiff would be interested to buy from defendants another strip of 12 donums of land. Mr. Ropas maintained that far from agreeing to any extension of time, he had no authority whatever to waive the rights of the defendants or any of them under the agreement.

The plaintiff, on the other hand, and his agent testified that they formed the view that Mr. Ropas (D.W.3) was the agent of defendants having regard to the fact that he was the moving spirit of the negotiations prior to the execution of the agreement and the only person who showed any interest in its enforcement. The defendants, notably Georghios Tchiailis, defendant 1 (D.W.1), Elisavet Tchiailis, defendant 3 (D.W.2), Evangelia Koutsoudis nėe Tchiaili, defendant 4 (D.W.4) and Charalambos Tchiaili, defendant 5 (D.W.5) testified that the authority they gave to their grandfather was limited to collecting moneys owing under the agreement and that on no occasion did they empower him to grant an extension of the time of payment of the liabilities of the plaintiff under the contract.

Despite defendants' testimony that they furnished their grandfather with limited authority only, they were, [*48] on any view of their evidence, happy to leave matters with regard to the enforcement of the agreement in the hands of their grandfather.

Defendant 1 is a resident of the D.K, and his principal complaint, as he put it in evidence, laid in the fact that plaintiff caused trouble to the old man, his grandfather, by not living up to his promises and he would have harboured no grudge had plaintiff paid off the balance by the end of July 1979, as he had allegedly promised to his grandfather. Elisavet, Evangelia and Charalambos, though residents of Cyprus, took no initiative whatever in the direction of either contacting the plaintiff or any of his representatives of Cyprus, nor did they address before 15th October 1979 any protest to the plaintiff. On the contrary, they relied on their grandfather for everything.

At the outset of the proceedings Mr. Karas, explaining the presence of Georghios Ropas in Court, stated on behalf of defendants that Mr. Ropas was defendants' representative from the time of execution of the agreement till its termination, implying thereby that he remained their agent until mid October 1979. Mr. Poetis relied on the aforesaid statement and plaintiff proceeded with the presentation of his case on the assumption that defendants did not dispute the fact that their grandfather was, for all the purposes of the agreement, their agent. Independently of our finding as to the capacity of Mr. Ropas, the defendants cannot legitimately complain for delay in the payment of the initial instalments upto the amount of £10,000 for, manifestly, they [*49] accepted payment unreservedly. The unqualified acceptance of performance of contractual obligations at a time subsequent to that set forth in the contract results in the forfeiture of any right the promisee might have to claim compensation or avoid the agreement. And acceptance of payment without reservation, as it happened here with the amount of £10,000, amounts to acceptance of performance and disentitles the defendants from insisting on their rights with regard to the payment of the amount of £10,000. Section 55(3) of the Contract Law, Cap. 149, clearly provides for the forfeiture of a right to rescind an agreement where performance is accepted subsequent to the date stipulated for in the agreement even in cases where time is of the essence. This is a codification of an aspect of equitable estoppel ordinarily referred to as waiver. In Aquis Estates Ltd. v. Minton (1975) 3 All E.R. 1043 (C.A.), it was held that the pursuit of a course of conduct inconsistent with the retention of contractual rights leads to the inescapable inference that a party pursuing such a course is deemed to have waived his right under the agreement.

In our judgment the defendants had no valid cause to withdraw from the agreement owing to delay in the payment of the instalment of £10,000. The agreement expressly provided for the payment of the balance within five months after the payment of the basic initial instalment of £10,000. Inasmuch as the amount of £10,000 was paid by early February 1979, the agreement imposed an obligation to pay the balance within five months thereafter. The plaintiff [*50] offered to pay the balance in October I979, that is to say after the lapse of the period envisaged in the agreement. Three questions arise for consideration, the resolving of which is essential for the determination of the case:

(a) Was the time of payment an essential term of the agreement in the sense that it entitled the defendants to rescind the agreement in the event of default on the part of the plaintiff to meet the relevant obligations? If the answer is in the affirmative and time was of the essence, two further questions arise for consideration:

(b) Was Georghios Ropas the agent of the defendants in particular did defendants hold out that he was their agent? And if the answer is positive a third question poses for consideration:

(c) Did the defendants, through their agent, waive their rights under the agreement with regard to the time of payment of the purchase prise?

The time for the performance of obligations undertaken in a contract is not ordinarily of the essence in the sense that non compliance with such a term confers on the aggrieved party a right to rescind the agreement. This is the position at common law and finds expression in a codified form in our statute, notably in s. 55(1) and s.55(2) of the Contract Law, Cap. 149. By their agreement the parties made time of the essence, stipulating that the contract would cease to have effect in the event of failure on the part of the purchaser to comply with the terms regulating the payment of the purchase [*51] price. Therefore unless we hold, and the burden is on the plaintiff, that defendants waived this right they had under the agreement, their action to cancel the agreement could not be faulted.

We must next resolve whether defendants represented their grandfather to be their agent with regard to their rights under the agreement. Having carefully considered the evidence in its totality our finding is that defendants made this representation to plaintiff who, in consequence, was perfectly justified to look upon him as the agent of the defendants, Mr. Ropas played a dominant role in the negotiation of the agreement and played a decisive part in reaching agreement on the purchase price. For a long time afterwards the defendants were happy to leave everything in the hands of their grandfather who claimed to represent them. The statement made by Mr. Karas on behalf of the defendants at the opening of the trial is fully consonant with the realities of the case. The only initiative defendants ever did take was the attempted cancellation of the agreement. The defendants are, because of their conduct, estopped in justice and equity from asserting that the grandfather was anything other than their agent for all purposes concerning the enforcement of the agreement (exh.2), and we so find.-

Waiver

The last question to be answered is whether defendants waived, through their representative, Mr. Ropas, their right under the agreement, to rescind the contract with plaintiff, for failure to comply with the time provisions[*52]for payment of the purchase price.

Waiver is an aspect of equitable estoppel as it was noted judicially in numerous decisions. And the tendency is to elevate equitable estoppel into an important branch of the law in the interests of justice. In Ismail v. Polish Ocean Lines

(1976) 1 All E.R. 902, Lord Denning inclined to the view that an estoppel can be set up successfully whenever it would be unjust and inequitable to allow a party to resile from his representations made by words, or conduct. And it is unjust to allow a party to escape from such representations whenever the representee has in consequence there of changed unalterably his position. In accordance with the present state of the law all that is necessary to establish is an irrevocable alteration of one’s position; detriment as such need not be proved as a prerequisite to establishing estoppel. (See Emmanuel Ayodeji Ajayi v. R.T. Briscoe (1964) 3 All E.R. 556). Of course the representation or conduct relied upon to set up an estoppel must be clear and unequivocal. (See Woodhouse Ltd. v. Nigerian Produce Ltd. (1972) 2 All E.R. 271). The test of acquiescence to abandonment of one’s rights, is in accordance with the

decision in Shaw v. Applegate (1978) 1 All E.R. 123, whether it would be di s honest or unconscionable to allow a party to enforce the contractual rights that he gave the impression of abandoning .

It is possible to reactivate one’s contractual rights provided the other party has not altered his position to a degree that it would be inequitable to require him to go back, upon giving reasonable notice. The reasonableness [*53] of the notice is judged, as it was held in Wykes v. Davis (1975) 1 All E.R. 399, by reference to the surrounding circumstances, particularly the time that would normally be required for accomplishing the task in question. Unless the interval specified is, in the totality of the circumstances of the case, reasonable, the notice is invalid.

The Supreme Court of Cyprus accepted equitable estoppel in all its manifestations as an integral part of our law in the case of Georghios HadjiYannis v. Attorney General of the Republic (1971) 1 C.L.R. 32.

The doctrine of equitable estoppel is aimed at freeing the hand of the Court from the provisions of positive law whenever justice and equity so dictate. It tempers the rigor of the law without ousting it and opens the way to doing justice as the merits of the case necessitate.

We have carefully examined the conflicting-evidence touching upon the communications between Mr. Ropas and the plaintiff as well as his agents Christos Arghyrides and Andreas Droushiotis. On an objective view of the evidence ignoring for a moment the conflicting evidence of the parties, one can easily infer that defendants were in no hurry to collect the balance due under the purchase agreement. They never addressed any written notice to plaintiff or his agents asking payment and certainly they accepted payment of the amount of £10,000, after long delay, without objection or reservation.

Having carefully examined and evaluated the [*54] evidence before us and having heard the witnesses testify before us we unhesitatingly accept the evidence of plaintiff and that of Mr. Arghyrides and Mr. Andreas Droushiotis, and find that Mr. Ropas repeatedly assured both the plaintiff and his agents that they were in no hurry to collect the balance and in consequence the plaintiff need not strictly adhere to the obligations undertaken in exhibit 2.

We further find that the first occasion on which Mr. Ropas demanded payment of the balance was in September 1979. We need not examine the implications of this demand on the rights of the parties for we accept that soon after this request and in any event within a reasonable time the plaintiff offered to pay the balance, an offer that was refused . Therefore we need not give a final decision whether the request of defendants for the payment of the balance had the effect of reactivating the obligations of the parties under the agreement casting upon the plaintiff an obligation to pay the balance within five months or whether it was incumbent upon plaintiff to pay the balance within a reasonable time from the date of the request.

Soon after the request plaintiff dispatched the money to Cyprus following which Andreas Droushiotis sought out Mr. Ropas with a view to paying the balance over to him but having failed to accomplish his task on the first occasion, he made a second attempt on 7th October 1979, accompanied by Mr. Ierides (P.W.4), another relation of plaintiff, again without success. The attempt of the defendants to cancel the agreement, thereafter, was but an [*55] afterthought designed to release them of their obligations under the agreement that apparently they came to regard as onerous, having regard to the considerable rise in the value of the land they sold. In our judgment the failure of the defendants to accept the balance and transfer the land to plaintiff amounted to a breach of their agreement with the plaintiff. Therefore the plaintiff has a legitimate cause for damages for breach of contract.

Damages.

The rules regulating the award of damages for breach of contract are those evolved in the well known case of Hadley v. Boxendale (1854) 9 Exch. 341 (see also Koufos v. C. Czarnikow Ltd. (1967) 3 W.L.R. 1491 (H.L.) and The Heron II

(1967) 3 All E.R. 686 (H.L.)), codified in Cyprus by virtue of the provisions of s. 73(1) of the Contract Law, Cap. I49. The general rules pertaining to the award of damage, in either contract or tort, are, as May J. indicated in C.R. Taylor (Wholesale) Ltd. v. Hepworths Ltd. (1977), 2 All E.R. 784, subject to the additional rule that damage must be reasonable between the parties.

Both parties adduced evidence about the value of the property in or about the month of October 1979, the day of the alleged breach. Two experienced valuers, namely Mr. Patrikios and Mr. Pantelides, made a valuation of the property at the time of breach. Although the two valuers rely basically on the same material as an aid for ascertaining the value of the subject property they arrive, surprisingly, at widely differing conclusions. Mr. Patrikios valued [*56] the property as worth £48,000 whereas Mr. Pantelides valued it at £23,000. Mr. Pantelides regards the three properties, the sale of which is relied upon as a guide for comparison, as superior to the property under consideration on account of their locality, frontage, shape, location and extent. In his report and in evidence before us he articulated in detail his views on the subject and the reasons that led him to the conclusion that the property under consideration is, from every view point, inferior to each one of the three plots, relied upon for comparison.

Mr. Patrikios, on the other hand, regards the three properties: as strictly comparable to the subject property, albeit slightly inferior, for the reasons he adumbrated in his report and explained in evidence before us.

The three comparables are situate within close proximity to the subject property. They consist of land of a similar kind and were sold in May and October therefore they offer good material for comparison. And in our judgment they broadly reflect value trends in the area at the material time.

We have examined the evidence of the two valuers in its totality and in our judgment the valuation of Mr. Patrikios is, by en large, more sound and to the point. We formed the impression that Mr. Pantelides took pains to cut down the value of the subject property by identifying a number of artificial and non existing dissimilarities between the comparables and the subject property.[*57]

In the totality of the evidence before us we find that the value of the subject property in October 1979 was £3,000 per donum, giving us in all £36,000. The plain tiff owed £8,000.- that should be deducted from the amount of £36,000 plus in fairness, interest theism calculated as provided in exhibit 2 at the rate of 6 per cent per annum from 2 9th May, 1978.

In the result judgment is given for the plaintiff against the defendants jointly and severally for £26,560, with costs to be assessed by the Registrar and approved by the Court. The counterclaim is dismissed, with no order as to costs.

Judgment against defendants for £26,500. Counter claim dismissed. Order for cost as above.