The Barbuda Council v PLH (Barbuda) Ltd

• Jurisdiction: Antigua and Barbuda
• Judge: Farara JA
• Judgment Date: 16 September 2025
• Judgment citation (vLex): [2025] ECSC J0916-1
• Docket Number: ANUHCVAP2024/0030
• Court: Court of Appeal (Antigua and Barbuda)

Between:

The Barbuda Council

Appellant

and

PLH (Barbuda) Limited

Respondent

[2025] ECSC J0916-1

Before:

The Hon. Mde. Vicki-Ann Ellis Justice of Appeal

The Hon. Mr. Gerard St. C. Farara Justice of Appeal [Ag.]

The Hon. Mde. Cadie St. Rose-Albertini Justice of Appeal [Ag.]

ANUHCVAP2024/0030

THE EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Civil appeal — Contract law — Interpretation of contractual provisions — Lease Agreement — Claim for arrears of rent — Memorandum of Agreement — Airport Escrow Agreement — Whether the learned judge erred in accepting the respondent's interpretation of the relevant provisions of the Memorandum of Agreement, the two leases and the Airport Escrow Agreement

The underlying dispute between the parties and principal issue in this appeal concerns the interpretation of contractual provisions contained in certain agreements and leases entered into during the period December 2016 to February 2017 between the Government of Antigua and Barbuda (“the Government”) and the Barbuda Council (“the Council” or “the appellant”) on the one hand, and PLH (Barbuda) Limited (“PLH” or “the respondent”) on the other. These agreements provided for and were entered into to facilitate the undertaking by PLH of a major tourism and hotel development on two parcels of land situated at Low Bay and Pink Sands on the island of Barbuda leased separately by PLH from the Government, with the agreement and consent of the Council.

The 425 Lease was entered into on 22 ^nd February 2017 by and between the Council a statutory body corporate established pursuant to The Barbuda Local Government Act, as lessor, Doctor the Honourable Sir Rodney Williams Governor General of Antigua and Barbuda for and on behalf of the Government and PLH, the respondent — a company incorporated and existing under the Laws of Antigua and Barbuda as lessee. By the 425 Lease, the Government demised on to PLH 425 acres of land situated at Low Bay and Pink Sands in Barbuda for the initial term of 99 years from the effective date of the Lease, at the annual rent of US$150,000.

The 425 Lease expressly incorporated the covenants in the prior Memorandum of Agreement (“MOA”) entered into by the same parties on 6 ^th December 2016. The MOA sets out the terms and conditions under which the Government and the Council agreed to collaborate to support the proposed development of certain lands in Barbuda more particularly described at clause 1.1 of the MOA as “the Property”. This includes but is not limited to clause 5.8 which provided for a US$5 million contribution to be made by PLH and paid into an escrow fund to be set up at a bank to assist in financing the budgeted cost of US$14 million for the construction of a new airport on Barbuda, and for this sum paid into the escrow account to be credited to PLH “ as prepayment of rent due under the Lease” to be granted to PLH by the Government and the Council.

The parties to the 425 Lease executed and entered into on the same day, (22 ^nd February 2017) a second lease, referred to as “the 174 Lease”. By this second lease the Government and the Council demised onto PLH 174.83 acres of land at Low Bay and Pink Sands on Barbuda for the initial term of 99 years at an annual rent of US$62,938, totalling US$6,230,941.20 for the term of the said Lease. Clause A.1 of the 174 Lease is an express and detailed provision for the application and credit of the sum of US$5 million contribution by PLH toward the airport construction budget, to the annual rents to be paid under clause A.1 of the said Lease, as stipulated by clause 5.8 of the MOA. No such detailed provision appears in the 425 Lease. However, both the 425 Lease and the 174 Lease by their respective clause A.2 were made expressly subject to and includes the covenants contained in the MOA by and between the Government, the Council and PLH.

Also, on 22 ^nd February 2017 the Government, the Council and PLH entered into the Airport Escrow Agreement (“AEA”) (originally titled ‘Proposed Airport Escrow Agreement’) as contemplated and provided for under clause 5.8 of the MOA. Clause 1 of the AEA stipulated that PLH shall within 3 business days of the date of said agreement, deposit the sum of US$5 million with Global Bank of Commerce Ltd. (“the Bank”) which Bank will hold the funds in a segregated account at its branch at St. John's, the capital of Antigua and Barbuda. It is not in dispute that the full amount of US$5 million was in fact paid or transferred by PLH into the said escrow bank account on 14 ^th March 2017.

On 1 ^st December 2021, the Council's lawyers sent two letters to PLH's legal team. One letter demanded payment by PLH of arrears of rent at US$150,000 per annum under the 425 Lease for the years 2017 to 2021 (inclusive) totalling US$750,000 plus $2,127.50 legal costs, and gave notice that failure to make payment of the sum demanded within 15 days could result in the Council exercising its remedies under the said lease. The second letter was in relation to the 174 Lease, and specifically clause 5.8 dealing with the obligation on the part of PLH to pay the sum of US$5 million into an escrow account at Global Bank of Commerce. The Council requested confirmation that PLH had paid the said sum into said bank account since it had no record of this having been done. The Council also gave notice pursuant to clause A.4(1)(a) of the 174 Lease of its intention to exercise its remedies under said Lease if it did not receive appropriate evidence that the US$5 million sum has been paid into the said bank by PLH.

PLH's lawyers, in their written response to both letters, confirmed that the said sum of US$5 million had in fact been paid by it and deposited into the escrow account at the said bank. In the said response letter, PLH also disputed the claim for arrears of rent asserting that pursuant to clause 5.8 of the MOA which was expressly incorporated as a covenant under both the 425 and 174 Leases, the claim for arrears of rent under the 425 Lease was misconceived.

No payment having been made by PLH in satisfaction of the alleged arrears of annual rent under the 425 Lease, the Council commenced legal proceedings in the High Court of Justice by way of Claim Form and statement of claim filed 15 ^th February 2023 (approximately 14 months later). It claimed arrears of rent under the 425 Lease in the sum of US$900,000 equating to EC$2,445,210 plus court fees and legal costs. In its statement of claim, the Council having pleaded and summarised the salient terms of the MOA, the two Leases and the AEA, accepted that clause A2 of both Leases provided that the covenants therein shall be made subject to and include those contained in the MOA which shall be incorporated therein and made a part of the Leases, and where there is a conflict between the terms of these documents that terms of the MOA shall prevail.

In the defence filed 13 ^th March 2023, PLH denied the claim and relied on the express terms of clause 5.8 of the MOA which provided that the sum of US$5 million which it had paid into the escrow account at the bank “ shall be treated as an advance payment on rents due under the respective leases in respect of the development property.” PLH also pleaded and relied on clause 1.1(a) of the MOA and the definition of the term “property” therein as including both the 174.83 acres and the 425 acres each of which formed the subject matter of the respective leases dated 22 ^nd February 2017. It is also pleaded that by clause 5.8 of the MOA it was agreed by the parties that PLH “ is permitted to set off all payments under the ninety-nine year leases for 174.83 acres and 425 acres of land against the US$5,000,000 which was transferred into the Government of Antigua and Barbuda Airport Project Account at the Global Bank of Commerce”. Accordingly, PLH contended that it is entitled by virtue of clause 5.8 of the MOA and clause 5 of the AEA to withhold or set off any and all rents due under the respective leases against the US$5 million paid by it into the escrow account under the AEA for the purposes of the construction of the airport on the island of Barbuda.

After a trial on 2 ^nd July 2024 the judge, in a written judgment delivered 26 ^th September 2024 (“the judgment”), found for PLH on its interpretation of the various agreements and leases executed by the Government, the Council and PLH as to the correct meaning and effect of clause A.2 of the 425 Lease, as modified by clause 5.8 of the MOA. Accordingly, the judge dismissed the Council's claim for arrears of rent payable under clause A.1 of the 425 Lease and ordered the Council to pay prescribed costs to PLH on the claim pursuant to Part 65 of Civil Procedure Rules (Revised Edition) 2023.

The appellant, being dissatisfied with the lower court's decision, filed its notice of appeal on 5 ^th November 2024. In its notice of appeal, the appellant relied on four grounds of appeal:-

(i) The judge erred in finding that the testimony given on behalf of the claimants was of no assistance in the analysis of the evidence in consequence of which she failed to reach a proper interpretation of the meaning of the covenant to pay rent in the 425 Lease.

(ii) The judge erred in finding that there was a conflict between the covenant to pay rent in the 425 Lease and the terms of clause 5.8 of the MOA, having due regard to the terms of the 174 Lease which was executed simultaneously with the 425 Lease.

(iii) The judge failed to recognize the applicability of the principle in Rainy Sky SA and others v Kookmin Bank taking into account the whole course of dealings between the parties in relation to both the MOA and the 174 Lease and the 425 Lease both of which were executed on the same day between the same parties.

(iv) The judge erred in failing to interpret the 425 Lease having regard to the principles applicable to commercial contracts as the 425 Lease was such a contract.

Held: dismissing the appeal...