Frederick Donowa and 3 others v Donridge Heights Ltd (Trinidad and Tobago)

Whether a property-development agreement creates an agency or a sale depends on construing the agreement as a whole and examining its substantive consequences. A developer’s power to develop land and contract with sub-purchasers does not, without more, make it an agent. Indicators of a sale include immediate beneficial ownership, control of development and resale, assumption of development risk, instalment payment of the purchase price, and a share in development profits. Retention of legal title pending payment is not decisive. An unpaid vendor’s lien may protect the seller while the buyer develops, subdivides and resells the land. Contractual tasks imposed on the developer, rather than powers exercised on behalf of the owner, may also point away from agency.

The appellants owned development land and entered into the 2006 Agreement with Greenfield Properties Ltd. Greenfield was to develop and sell plots within the land, while the appellants were to receive the undeveloped market value and 55% of net development profits.

Greenfield later contracted to sell seven lots to Donridge Heights Ltd, but defaulted. Donridge obtained a default judgment against Greenfield and amended its claim against the appellants, alleging that Greenfield had made the sale agreements as their agent. Rajkumar J ordered the appellants to pay damages in October 2014. The Court of Appeal of Trinidad and Tobago dismissed their appeal in October 2019. The central issue before the Board was whether the 2006 Agreement constituted Greenfield as the appellants’ agent for the making and performance of the sale agreements, rather than conferring a purchaser’s interest in the property.

1. Appeal allowed. The only pleaded basis for liability against the appellants was agency. The question had to be determined by construing the whole of the 2006 Agreement.
2. The agreement was in substance much more like a sale than an agency. The appellants were to receive the undeveloped market value of the Phase 1 land, payable by instalments, together with 55% of net development profits. Greenfield obtained control of the property, could choose the development and sub-purchasers, and bore the risks of development, including any losses.
3. The obligations in clause 3 were contractual tasks designed to create the possibility of profit. They did not confer powers requiring Greenfield to act on behalf of the appellants. Greenfield apparently controlled the selection and timing of sales, the nature of the lot development and the sale prices. It was not accountable for sale proceeds except through the agreed profit share.
4. Several provisions supported the sale classification. Requiring the property to be made available free from encumbrances was unnecessary for a mere agent. Requiring transfers to end-owners was consistent with sub-sale. The reference to the balance of the purchase price was strongly indicative of a sale.
5. Retention of legal title and deferment of part of the price did not require an agency classification. The agreement conferred immediate beneficial ownership on Greenfield, subject to the appellants’ unpaid vendors’ lien. Greenfield could develop, subdivide and resell the property like a buyer under an uncompleted contract for sale, and could direct the transfer of legal title to sub-purchasers.
6. The Board did not determine liability on an alternative partnership or joint-venture basis because that case had never been pleaded. The appellants were therefore not liable as principals for breach of the 2008 Agreements.

• Privy Council: Appeal as of right allowed.
• Court of Appeal of the Republic of Trinidad and Tobago: Appeal dismissed in October 2019, with costs.
• Trial court: Rajkumar J ordered the appellants in October 2014 to pay damages of TT$2,457,770, together with interest and costs.