The Attorney General v River Dorée Holdings Limited

In construing a lease, a recital may assist interpretation only where it can be read consistently with the substantive and operative provisions. A clear operative clause cannot be controlled, cut down or qualified by an inconsistent recital. Where an operative clause sets out the conditions for exercising an option, the court must not add a further condition from the recital. Negotiations are inadmissible as an aid to construction. Under St Lucia’s Civil Code, English common-law principles prevail subject to express Code provisions, while the statutory rule favouring common intention applies only where meaning is doubtful. An evidential provision concerning recitals does not make them control the operative part of a deed.

The Government of Saint Lucia granted The Attorney General v River Dorée Holdings Limited a 50-year agricultural lease containing an option to purchase. Recital E made purchase conditional on satisfactory performance of the lease and Development Program. Clause 9(9), however, allowed the option to be exercised after the tenth year without that express condition.

Master Cottle and Georges J treated recital E and clause 9(9) as requiring satisfactory performance. The Court of Appeal reversed that conclusion, holding that clause 9(9) was clear and unambiguous, and awarded nominal damages. The central issue before the Privy Council was whether the recital, background negotiations, a unilateral licence or provisions of the St Lucia Civil Code altered the construction of clause 9(9).

The Board unanimously dismissed the appeal and advised that River Dorée was entitled to exercise its option to purchase. The Court of Appeal’s order remained in force.

1. Recital and operative clause. A recital may inform the interpretation of a substantive provision only where the two are capable of being read consistently. Clause 9(9) clearly specified the conditions for exercising the option. It conflicted with recital E, so the substantive and operative provision prevailed. The Board applied the principle in Mackenzie v The Duke of Devonshire [1896] AC 400, that clear operative words cannot be controlled, cut down or qualified by a recital.
2. Contractual structure. The lease separately protected the Government. Before exercise of the option, breach could lead to re-entry and determination of the lease. After exercise, failure to carry out the Development Program could lead to forfeiture under the required deed and licence provisions. Those arrangements reinforced the conclusion that satisfactory performance was not a condition of exercising the option.
3. Background material. The pre-contract letters were negotiations and were inadmissible for interpretation, applying the settled rule in Chartbrook Ltd v Persimmon Homes Ltd [2009] UKHL 38. Even if considered, they represented an earlier stage of negotiations and did not alter the final lease. The unilateral licence was of uncertain date and uncertain prior knowledge, and did not assist. The Board also referred to the modern restatement of contractual interpretation in Arnold v Britton [2015] UKSC 36 and Wood v Capita Insurance Services Ltd [2017] UKSC 24.
4. St Lucia Civil Code. Article 917A of the Civil Code of St Lucia preserved English common-law principles subject to express Code provisions. Article 945 applied only where meaning was doubtful, which was not the case. Article 1141(2) concerned evidence of recital contents, not contractual construction. Costs submissions were permitted within 21 days, prima facie payable by the Government.

• Privy Council. By [2017] UKPC 39, the appeal was dismissed and the Court of Appeal’s order was left in force.
• Court of Appeal of the Eastern Caribbean Supreme Court (Saint Lucia). On 25 November 2013, the court reversed Georges J, held that clause 9(9) was unambiguous and awarded River Dorée declarations and EC$50,000 nominal damages.
• Georges J. On 30 July 2012, the court upheld Master Cottle’s interpretation that the purchase option was conditional on satisfactory performance of the lease and Development Program.
• Master Cottle. On 27 October 2006, the preliminary construction issue was decided in favour of the Government.