Oceania Heights Limited (Appellant) v Willard Clarke Enterprises Limited and Others (Respondent)

A statutory prohibition, even when backed by criminal penalties, does not automatically make a contract or conveyance void. The effect depends on public policy, including the statutory mischief, language, scope and purpose, the consequences for innocent parties and other relevant factors. A sale contract may be unenforceable while the prohibition remains unsatisfied, yet a completed conveyance may still transfer legal title. Under the Registration of Records Act, section 10, a land-sale contract is a “bargain” and priority is given to the first document lodged and accepted for record, rather than the first executed. That priority can prevail where an earlier contract is completed after the later contract is registered.

Willard Clarke Enterprises Limited subdivided land in the Bahamas and sold eleven lots to various purchasers. It later agreed to sell the whole land, including those lots, to Oceania Heights Limited. The agreement was registered before the purchasers’ subsequent conveyances, although the purchasers’ earlier sale contracts were not registered.

Lyons SJ held that the contracts and conveyances were void under the Private Roads and Sub-Divisions (Out Islands) Act, Chapter 257, and ordered a conveyance to Oceania. The Court of Appeal, on 27 July 2010, reversed that decision, holding that breaches of sections 5 and 7 created criminal liability but did not invalidate the conveyances. The central issues before the Board were the effect of Chapter 257 and whether the registered agreement had priority under section 10 of the Registration of Records Act, including whether that point could be raised on appeal.

The Board allowed the appeal on the section 10 priority ground. It agreed with the Court of Appeal that the conveyances were not invalidated by Chapter 257.

1. Effect of statutory prohibition. The breach of sections 5 and 7 of the Private Roads and Sub-Divisions (Out Islands) Act made the sale contracts unenforceable while WCE remained prohibited from conveying the lots. It also exposed WCE to criminal fines under section 9. It did not, however, prevent completed conveyances from vesting the legal estate in the purchasers. The Board applied the public-policy approach explained by Phoenix General Insurance Co of Greece SA v Halvanon Insurance Co Limited [1988] QB 216, p 273. The statutory language, purpose and context, together with the likely prejudice to purchasers, supported that conclusion.
2. Raising the section 10 point. Oceania was permitted to argue the point despite imperfect preservation. It was potentially determinative, had been pleaded and raised in the courts below, was fully addressed in the written cases, and the respondents identified no prejudice.
3. Priority under section 10. The word “bargain” included a contract for the sale of land. Priority was given to the first sale contract lodged and accepted for record, rather than the first contract executed. That priority was not displaced merely because an earlier contract was completed after the later contract had been registered. The registered 1996 Agreement therefore had priority over the purchasers’ earlier unregistered contracts and subsequent conveyances.
4. Relief and costs. The Board left open whether the conveyances were ineffective against Oceania or remained effective subject to Oceania’s rights. Specific performance was ordered against WCE and the purchasers, with the method of conveyance to be agreed or determined by Lyons SJ or another judge. The Board expressed the provisional view that there should be no order for costs, subject to further submissions.

• Privy Council — [2013] UKPC 3: allowed Oceania’s appeal on the section 10 priority ground, while agreeing with the Court of Appeal on the Chapter 257 issue.
• Court of Appeal of the Commonwealth of the Bahamas — 27 July 2010: allowed the respondents’ appeal and held that the statutory breaches did not invalidate the conveyances.
• Lyons SJ — 29 August 2008: held that the contracts and conveyances were void under Chapter 257 and ordered conveyance of the eleven lots to Oceania.