To: Chairman and Members, Central Housing and Planning Authority
From: Hannifah Jordan, Corporate Secretary
On behalf of the Management Team, CH&PA
Date: July 19, 2016
Subject: Review of Eccles Industrial Scheme owned and operated by Central Authority
The Central Authority purchased in 2011 Parcel 1215 Plantation Eccles, East Bank Demerara from Guyana Sugar Corporation Inc. Transport No. 1951/2012 passed in favour of the Central Authority was converted to a Land Registration Area under the Land Registry Act, Chapter 5:02. The Central Authority is now the registered proprietor of the land by way of Certificate of Title No. 2013/627.
The Central Authority decided to develop an industrial site on the said Parcel of land and entered into an Agreement for Lease with an Option to Purchase with the purchasers/developers. See list of Developers attached hereto.
An agreement for lease is a transaction whereby the parties bind themselves, one to grant and the other to accept, a lease. It is an ordinary contract that contains a term granting to the Lessee an option to purchase the lessor’s interest in the demised premises. The option to purchase stipulated a period of time wherein the Lessees were obligated to give notice in writing of their desire to purchase the land and on payment of the purchase price in full, the Lessor will convey the demised premises to the Lessees.
The Agreement was for a period of three (3) years: Section 6:2 Landlord and Tenant Act, Chapter 61:01 and a Certificate of Title would be passed to the developer on the exercise of the option in writing.
Option to Purchase
The option agreement constitutes an irrevocable offer to sell and once the plaintiff accepted that offer by exercising the option, a contract has come into being. The option holder is [therefore] the prime mover: Langrin J in Broadway Import and Export Ltd v Levy (1996) Jamaica No CL 1993 B 081 (unreported).
Clause 16 of the Agreement for lease states:
If the Lessee at any time after the end of the second year of the contractual term is desirous of purchasing the Lessor’s Freehold Title, the Lessee must give the Lessor six (6) months’ notice in writing and upon the expiration of such notice and on payment of all rental and arrears, if any, up to the expiration of the notice shall enter into an Agreement of Sale and Purchase
with the Lessor who shall thereafter convey Certificate of Title for the said parcel of land to the Lessee.
Therefore any time after the second year of the lease, the lessee had to give at least six months’ notice in writing of his intention to purchase the property leased.
In the event there was a condition precedent to the exercise of the option, it must have been strictly complied with. In the Agreements for Lease the following clauses were condition(s) precedent, namely:-
To pay the Rent reserved and all sums due under the Lease on the days and in the manner aforesaid.
To use and occupy the demised premises for the establishment of a Mechanical, Electrical and Construction Workshop.
All buildings constructed on the demised premises shall be for the specific use for which permission was first obtained. Any change in the intended use as prescribed in 7 above shall require the express written consent of the Lessor.
To commence construction on the land within 3 (three) months from the commencement of this lease and beneficially occupy at least half of the land hereby leased and shall be bound at all times during the continuance of this lease to maintain the building and improve the beneficial occupation to the satisfaction of the Central Housing and Planning Authority.
To complete construction Twelve (12) months of the date hereof.
Failure to complete construction Twelve (12) months of the date hereof, the Lessee will be charged a penalty of Ten Thousand Dollars ($10, 000.00) for each month of default. The penalty may be waived by the Lessor provided the Lessee is in beneficial occupation of and conducting its approved business on a part of the land prior to the expiration of the specified construction period.
Therefore the developer ought to have paid his rent on time, used the land for the purpose specified and beneficially occupied the premises within the stated times or to the satisfaction of the Central Authority prior to the exercise of the option.
Once the developer exercised the option, the role of Vendor and Purchaser comes into being and a Certificate of Title would be passed transferring title to the developer subject to stated conditions.
Failure to exercise the Option to Purchase
Where however the option has not been exercised and the lease expires, the option is no longer exercisable by the tenant. Therefore, an option to purchase the reversion [of the lease] will usually terminate on expiry of the lease and will not be exercisable by a Tenant who holds over after such expiry: Bradbury v Grimble and Co (1920) 2 Ch 548. This is the situation that currently exists for several of the former lessees at the new Eccles Industrial Site. See attached list showing development on the land and leases expired.
Examples of specific cases that led to breaches
Crown Mining Supplies
This business had encroached on the road reserve adjoining their land by fencing the entire road reserve. The owners subsequently wrote requesting to purchase the said road reserve and were advised that their request was not approved and were instructed to demolish the fence. The Central Authority refused to accept the rent forwarded for payment until compliance with the instruction issued. The business on the 13th May 2016 via letter dated 12th May 2016 indicated that they have not complied with the Central Authority’s request after the Agreement for Lease had already expired. This business is in operation.
Raiwa’s Woodworking Estb
This developer (Mr. Ilahi) indicated that he would pay his rent when the required infrastructure was in place in the area. When he sought to exercise the option the Agreement had already expired. The developer is currently constructing a building on the land.
In moving forward, provided that the former lessees had complied with the terms and conditions of the lease by completing the construction of a building(s) and beneficially occupying the land for the stated, It is recommended that the Central Authority enter into an Agreement for Sale and Purchase with the said business (es). This will legitimize the sale that existed previously and allow for additional or new conditions, if any, to be attached to the sale of the land.
For those businesses that failed or refused to begin construction and were in breach of the said leases, the Central Authority may demand the rental owed for the period of the lease and notify the former lessees that the sale will not be completed but for the breach of Agreement. The rental paid can be deemed as payment for the use of the land for the period of the lease.
Therefore for those in breach there is no legal obligation on the Central Authority to enter into new agreements of sale and purchase.
Further, all former lessees should be written to indicating the current position and stating the way forward to be exercised by the Central Authority.
Transfer of Commercial/Industrial Schemes to Ministry of Business
There has been communication to the Central Authority regarding the transfer of Commercial and Industrial Schemes owned and operated by the Central Authority to the Ministry of Business. Once this is approved and the legal procedures adopted, the Ministry may decide to adopt the above recommendations on the way forward for the lands already allocated.
For your information,