The Proprietors, Condominium Plan No. 2/1989 Appellant v Trinity Investment Company Ltd Respondent [1] Trinity Investment Company Ltd [2] Orest Bedrij [3] Oksana Bedrij [4] Chrystyhna Bedrij [5] Rokssana Bedrij Respondents v [1] The Proprietors, Condominium Plan No. 2/1989 [2] John Firth [3] Tom Kepler [4] John Greaves [5] Sal Rosa Defendants/Appellants

• Jurisdiction: Antigua and Barbuda
• Judge: Michel JA,Justice of Appeal,Chief Justice,Mario Michel,Dame Janice M. Pereira, DBE,Gertel Thom
• Judgment Date: 19 September 2016
• Judgment citation (vLex): [2016] ECSC J0919-1
• Court: Court of Appeal (Antigua and Barbuda)
• Docket Number: ANUHCVAP2008/0009
• Date: 19 September 2016

[2016] ECSC J0919-1

EASTERN CARIBBEAN SUPREME COURT

IN THE COURT OF APPEAL

Before:

The Hon. Dame Janice M. Pereira, DBE Chief Justice

The Hon. Mr. Mario Michel Justice of Appeal

The Hon. Mde. Gertel Thom Justice of Appeal

ANUHCVAP2008/0009

Between:

The Proprietors, Condominium Plan No. 2/1989

Appellant

and

Trinity Investment Company Limited

Respondent

[1] Trinity Investment Company Limited

[2] Orest Bedrij

[3] Oksana Bedrij

[4] Chrystyhna Bedrij

[5] Rokssana Bedrij

Respondents

and

[1] The Proprietors, Condominium Plan No. 2/1989

[2] John Firth

[3] Tom Kepler

[4] John Greaves

[5] Sal Rosa

Defendants/Appellants

Civil appeal — Breach of statutory duty — Section 5(1)(d) of the Registration of Condominium Titles Act — Whether directors personally liable for breach of statutory duty by Corporation — Liability for breach of trust as constructive trustee — Claimant's entitlement to unspecified special damages — Obligation by unit holders of a condominium to pay homeowners fees — Power of proprietor of a condominium to impose penalties on homeowners

On 12^th June 2002, The Proprietors Condominium Plan, No. 2/1989 ("the Corporation") commenced proceedings against Trinity Investment Company Limited ("Trinity Investment") for the sum of US$99,695.69, being monies due and owing to the Corporation by Trinity Investment in respect of maintenance fees, utility charges and late penalties, as of 1^st June 2002, with interest at the rate of 18% per annum. On 11^th November 2002, Trinity Investment filed a defence and counterclaim seeking a declaration that Villa No. 21 ("Villa 21") (Trinity Investment's villa in the condominium) be deemed to have been destroyed during the period June 1996 to January 2002 and for an order that Trinity Investment's obligation to pay fees and assessments and other financial obligations had been suspended from June 1996 to December 2000.

Trinity Investment and its shareholders (collectively "the Respondents") subsequently instituted proceedings against the Corporation and its directors (collectively "the Appellants") for an order that the Appellants pay to the Respondents, damages for the cost of fully repairing and reinstating Villa 21; a declaration that Trinity Investment's obligation to pay fees and assessments had been suspended from June 1996 until reinstatement of Villa 21; damages for loss of use and enjoyment of Villa 21; and damages.

The claims and counterclaims were consolidated and following the trial of the consolidated matters, the learned trial judge made a number of orders. She dismissed the claim for a declaration that Villa 21 be deemed to have been destroyed within the meaning of section 14(2)(c) of the Registration of Condominium Titles Act ("the Act") as well as the claim that Trinity Investment's obligation to pay the maintenance fees, late fees and assessments and interest had been suspended. The learned trial judge ordered judgment in favour of the Corporation against Trinity Investment for damages in the sum of US$170,163.06, together with interest at the rate of 6% per annum from the date of judgment, and made a declaration that the directors of the Corporation acted in breach of the Act in applying part of the insurance proceeds towards the liquidation of debts owed by the Corporation and not for reconstructing or reinstating Villa 21. The learned trial judge also ordered judgment in favour of the Respondents against the Appellants for damages in the sum of US$85,000, with interest at the rate of 6% from the date of judgment.

Both the Appellants and the Respondents were dissatisfied with the learned trial judge's orders and appealed her decision on a number of grounds.

Held: Allowing the appeals in part and making the orders contained in paragraph 72 of this judgment, that:

• 1. When a defendant raises the Statute of Limitations in a claim instituted against him, the onus is on the claimant to prove that the cause of action accrued within the period of limitation. However, where the claimant provides evidence which leads to a reasonable inference that the cause of action accrued within the limitation period, the burden passes to the defendant to establish that the apparent accrual of the cause of action within the limitation period is misleading and that in reality the cause of action accrued at an earlier date. In the present case, the Appellants, as defendants in the court below, did not discharge the burden of establishing that the cause of action in fact accrued before the commencement of the period of limitation.

  Cartledge (Widow and Administratrix of the Estate of Fred Hector Cartledge (deceased)) and Others v E. Jopling & Sons, Ltd [1963] 1 All ER 341 applied.

• 2. Section 4 of the Registration of Condominium Titles Act provides that a proprietor of condominium lots acquires its own legal personality separate from that of its members or directors. Further, section 5(1)(d) of the Act places the obligation on the body corporate to apply insurance proceeds in rebuilding and reinstating property. Accordingly, any failure to do so results in a breach by the body corporate. Consequently, in this case, the Corporation, by virtue of section 5(1)(d) of the Act had an obligation to apply the insurance proceeds in rebuilding and reinstating the property, however, the directors of the Corporation had no such statutory duty to use insurance proceeds for any purpose. Therefore, the learned trial judge erred when she assimilated the position of the Corporation with that of the directors of the Corporation.

  Section 5(1)(d) of the Registration of Condominium Titles Act applied.

• 3. A person who assists with knowledge in a dishonest and fraudulent design on the part of trustees of a trust will be liable for the breach of trust as a constructive trustee. Therefore, where a fraudulent breach of trust known by a director to be fraudulent is done by a company at the direction of the director, so that the director is not only a party to it but the instigator of the fraudulent breach of trust and benefits from it, he is to be held liable. In the present case, the learned trial judge found that the directors acted honestly and in the best interests of the homeowners when, as directors of the Corporation, they facilitated the use of the insurance proceeds to liquidate some of the Corporation's debts. Accordingly, there was no fraudulent breach of trust known by the directors to be fraudulent and perpetrated by the Corporation at the direction of its directors.

  Glenko Enterprises Ltd v Keller and Another 2000 MBCA 7 applied; Barnes v Addy (1874) LR 9 Ch App 244 applied; Scott and Scott v Riehl and Schumak (1958) 15 DLR (2d) (1958) 15 DLR (2d) 67 (BCSC) applied.

• 4. If a claimant is to be awarded a sum of money claimed in special damages, he must substantiate it by evidence on which the court can rely. However, if the claimant fails to do so, he or she does not become disentitled to damages for loss suffered by him or her, but the court is entitled to disregard the specific amounts claimed by him or her and make such award in respect of the losses suffered by the claimant as the court considers reasonable in the circumstances. This is what the learned trial judge did in the present case. There was no basis therefore to interfere with the learned trial judge's award of damages to the Respondents against the Appellants.

• 5. An appellate court should not reverse the finding of a trial judge as to the quantum of damages because it thinks that it would have awarded a different sum if it tried the case at first instance. An appellate court will only be justified in reversing the amount of damages awarded by a trial judge where the appellate court is convinced either that the judge acted upon some wrong principle of law, or that the amount awarded was so extremely high or so very small so as to make it an entirely erroneous estimate of the damages to which a claimant is entitled. In the present case, there was no basis upon which it could be said that the trial judge acted on any wrong principle of law, or that the amounts she awarded for the costs associated with the reinstatement and refurbishment of Villa 21 were so extremely high or so very small so as to make it an entirely erroneous cost estimate of the damages to which the Respondents were entitled. Accordingly, there was no basis to interfere with the trial judge's award with respect to those claims.

  Flint v Lovell [1934] All ER Rep 200 applied.

• 6. In this case, the learned trial judge heard the evidence of the witnesses, had the opportunity to observe their demeanour and to make assessments of their credibility. She also had several documents before her in relation to the condition of Villa 21 after the passage of a hurricane and the removal of its roof. On this basis the learned trial judge made the factual findings that she did in relation to Villa 21. Accordingly, there was no basis to interfere with the factual findings made by the learned trial judge.

• 7. Unit holders in a condominium cannot lawfully refuse to pay fees that are levied against their property on the basis of any perceived grievance they may have with the proprietors of the condominium. In the present case, the alleged breaches of duty by the Corporation did not justify the unit holders withholding of the common charges payable by them. Accordingly, the learned trial judge did not err in declining to decide that Trinity Investment's obligation to pay the maintenance fees, late fees and assessments and interest had been suspended.

  Towers Condominium Association v Lawrence 32 V.I. 185, 188 (V.I. Terr. Ct. 1995) ; 1995 VIR 185 applied.

• 8. Neither section 5 of the Act nor section 1(b) of the First Schedule of the Act gives power to the Corporation to impose any kind of penalties on the homeowners whether by way of late penalty fees or late interest. The...