COMMONWEALTH of the BAHAMAS in the COURT of APPEAL Sccivapp No

COMMONWEALTH OF THE BAHAMAS IN THE COURT OF APPEAL SCCivApp No. 66 of 2015

B E T W E E N

CRESTA BELLA CONDOMINIUM ASSOCIATION BETTY SCHMID Appellants

AND

KENDRICK THOMPSON JOMARIE THOMPSON Respondents

BEFORE: The Honourable Dame Anita Allen, P The Honourable Ms. Justice Crane-Scott, JA The Honourable Mr. Justice Jones, JA

APPEARANCES: Mr. Reginald Shepherd, Counsel for the Appellants Mr. Elsworth Johnson, Counsel for the Respondents

DATES: 1, 15 December 2016

Civil appeal – Condominium law – Declaration of condominium – Restrictions contained in the declaration of condominium – Estoppel by acquiescence – Whether there was a breach by the respondents of the declaration of condominium? – Whether estoppel by acquiescence is available as a defence to a breach?

The second appellant constructed eight apartment units and made a Declaration of Condominium in respect of the units under the name of the Cresta Bella Condominium. The respondents are unit owners. The appellants alleged that the respondents, in breach of the Declaration of Condominium, kept pet dogs in their unit; they further alleged that the dogs created a nuisance and were a health hazard. The respondents admitted to keeping the dogs on the premises but asserted, inter alia, estoppel by acquiescence. Winder, J., the trial judge, correctly identified the issue joined between the parties as being whether there was a breach by the respondents of the Declaration of Condominium, however, he went on to find that the respondents had a defence. It is against that finding that the appellants appealed.

Held: appeal allowed. Costs of the appeal and costs in the court below to the appellants, to be taxed if not agreed. The respondents’ duty as unit owner was to strictly comply with all of the unit restrictions which were made binding on them by the Law of Property and Conveyancing (Condominium) Act. The Declaration made it pellucid that no unit owner was to keep any animals on the premises without prior written consent of the body corporate. Clearly, the respondents had no such permission, and estoppel, which is only a rule of evidence available in equity, could not be used to escape their statutory obligations. The respondents did not have prior permission in writing or any written permission at all; and were consequently in breach of the restriction, by which they were bound.

Maritime Electric Co. Ltd v General Dairies Ltd [1937] 1 All ER 748 applied

REASONS FOR DECISION

Reasons delivered by the Honourable Dame Anita Allen, P:

1. This appeal concerned a dispute over the keeping of pet dogs in a condominium apartment unit without the written permission of the body corporate. On 1 December 2016, after hearing the appeal against the decision of Winder J. delivered on 15 February 2015, we allowed the appeal, and granted the declaration that the respondents were in breach of paragraph 15 of the Second Schedule to the Declaration of Condominium made 31 January 2011.

2. We further granted the costs of the appeal and the costs in the court below, to the appellants to be taxed if not agreed. At that time we promised to give our reasons for our decision, this we now do.

3. The second appellant was the owner in fee simple of land situate in the Jacaranda Subdivision in the Western District of New Providence on which she constructed eight apartment units. On 31 January 2011, she made a Declaration of Condominium in respect of these units under the name of the Cresta Bella Condominium, subjecting the said property, namely, each of the eight units, to the Law of Property and Conveyancing (Condominium) Act (“the Act”), and to the terms and conditions contained in the said Declaration.

4. In particular, in paragraph 15 of the Unit Restrictions contained in the Second Schedule to the Declaration, there is a specific restriction concerning pets. It provides: “No unit owner shall keep any animals in his unit without the prior permission in writing of the body corporate.”

5. By a Conveyance of 5 April 2011, unit seven was conveyed to the respondents subject to all of the “easements, rights, obligations, conditions and restrictions” set out in the Declaration. 6. Neither in this Court, nor in the court below, was there any dispute that the dogs were kept in the respondents’ unit without the prior written permission of the body corporate.

7. The issues joined between the parties were set out in the pleadings in the Supreme Court, which showed that by a specially endorsed Writ of Summons filed by the Cresta Bella Condominium Association and the second appellant on 23 January 2014, the appellants alleged that the respondents, having agreed to abide by the terms and conditions of the Declaration of Condominium, brought the pet dogs into unit seven in contravention of the Declaration; and that despite requests to have the dogs removed from the premises, they remained there. The appellants further pleaded that the dogs created a nuisance and were a health hazard, and that by reason of these matters they suffered loss and damage.

8. The appellants prayed for a declaration that the respondents were in violation of the Declaration of Condominium; an injunction restraining the respondents by themselves, their servants or agents from allowing the dogs to remain on the premises; interest, and costs.

9. The respondents admitted the presence of the dogs on the premises, but asserted that they were not requested to remove the dogs from the premises until September 2013, some two years and nine months after they had moved them in. The respondents further asserted that the second appellant was always aware of the presence of the dogs on the premises, and knew that they were an integral part of the respondents’ family from they moved in, in February 2011.

10. The respondents further alleged that the second appellant played with the dogs and allowed her son to play with them when they visited the respondents’ unit. Consequently, the respondents say, that the dogs were on the premises with the expressed/and or implied consent of the appellants.

11. The respondents also complained in their defence, but did not plead it as a counterclaim, that it was a conflict of interest for the second appellant to act as general manager, president, and secretary of the Association; and moreover, they say, the second appellant acted outside the powers of the Act, and the powers and duties outlined in the Cresta Bella Condominium Declaration.

12. Suffice it to say, for the reasons hereinafter set out, neither of these assertions was a defence to the appellants’ action.

13. After a hearing before Mr. Justice Winder, the learned judge on 3 October 2014 in a written Ruling at paragraph 10 thereof, correctly and succinctly identified the

issue in dispute as whether there was a breach by the respondents of paragraph 15 of the Second Schedule to the Declaration of Condominium.

14. Regrettably, however, the learned judge fell into error in finding that the respondents had a defence; and was further drawn into determining issues which were not pertinent to the resolution of the dispute.

15. Notably, at paragraphs 25, 29 and 30 of the learned judge’s Ruling he made the following findings:

“25. In the premises, I find that the general meeting held on 23 May 2011, which excluded the Defendants who were unit owners and which included persons who were not unit owners, was improper and invalid as it was not called or conducted in accordance with the provisions of the byelaws. The appointment of non-unit owners to positions on the Board likewise contravened the provisions of the Act and the byelaws of Cresta Bella Condominium Association. In the absence of a duly established Board no authority existed which could have to (sic) move the court in the commencement of this action on behalf of the body corporate. … 29. I am satisfied that the Second Plaintiff sat by and allowed the Defendants to engage in acts which otherwise infringed her rights under the restrictive covenant contained in the Declaration. Additionally, by her actions she induced them to believe that she approved of the keeping of the dogs. As some of these inducements occurred prior to the Defendants’ purchase of the unit from the Second Plaintiff, I also am satisfied that they acted to their detriment, having been induced thereby. 30. In all the circumstances, I find as a fact that as there was no authority on behalf of the First plaintiff to commence this action, and as the Second Plaintiff is stopped from complaining of the Defendants keeping of the dogs in their unit. As I have determined that there was no authority to have commenced this action on the part of the Condominium Association, I will order that the costs are to be paid by the Second Plaintiff to the Defendants such costs to be taxed if not agreed.”

16. As will be seen later in this judgment, by virtue of section 13(2) of the Act, all the owners from time to time of the units in any property to which a Declaration relates shall, as from the date of the recording of the Declaration, constitute a body corporate by virtue of the Act under such style and title as is prescribed in the Declaration; and by subsection (3), the body corporate is capable of suing and being sued in its corporate name.

17. Indeed, paragraph 16 of the Declaration purports to constitute the Cresta Bella Condominium Association as the body corporate “to enable the unit owners for the time being to manage and operate the Condominium as an efficient whole.” While it is true that the body corporate is not specifically given a style or title by the Declaration, it is clear that the intention was to title the body corporate, the Cresta Bella Condominium Association.

18. Suffice it to say, paragraph 18 of the Declaration, declares each unit owner to be a member of the body corporate as of right, by virtue of his ownership of a unit; and declares each such owner to be entitled to exercise all of the voting rights in the manner prescribed by the Act, and subject to all obligations of a member in accordance with and by virtue of the Act. By paragraph 19, the body corporate is given power, inter alia, to enforce the Unit Restrictions in the Second Schedule to the Declaration in the event of any breach thereof by any Unit Owner.

19. Moreover, Clause 23 of the Declaration obliges each unit owner to observe the Restrictions and the Unit Restrictions.

20. In as much as there were no byelaws set out in the Declaration, the byelaws in the Schedule to the Act therefore applied. Those byelaws provide that the power and duties of the body corporate are to be exercised by a Board of the body corporate, which is to comprise not less than three, nor more than seven unit owners and shall be elected at each annual general meeting (AGM). There is an exception however, and that is where there are not more than three unit owners. In that case, the byelaw provides that the Board shall consist of all unit owners.

21. The byelaws further provide that except where there is only one unit owner, a quorum of the Board shall be two. At each AGM, the Board shall elect a chairman for the meeting who has a casting and an original vote; and all matters are to be decided by a simple majority.

22. In the case of Cresta Bella which had only two unit owners, the Board of the body corporate therefore comprised the second appellant, and the respondents. Consequently, by virtue of these provisions, there was a body corporate and a Board comprising both unit owners in existence; and in as much as the matters which the AGM purported to determine on 5 April 2011, had nothing to do with the enforcement of the unit restriction against keeping pets, the validity or otherwise of the meeting held on 23 May 2011 was irrelevant to the disposition of the dispute before the court. Indeed, as the learned judge himself correctly

stated, the resolutions purportedly passed at that meeting did not relate either to the commencement of the action, or to the dispute at hand.

23. In the premises, there was no requirement in the case of Cresta Bella to elect a Board, and the learned judge was clearly wrong to find that there was no duly established Board and no authority to move the court in the commencement of this action on behalf of the body corporate.

24. Additionally, when recorded, a Declaration, including the unit restrictions in the Schedule, are declared by section 6(4) of the Act to be binding on all unit owners in the building to which the Declaration relates. Moreover, subsections (2) and (3) of section 23 of the Act provide:

“23. (1)…

(2) Every unit owner and any person deriving any interest in the unit or the common property appertaining thereto from such unit owner shall strictly comply with the covenants, conditions and restrictions set forth in the relevant Declaration or byelaws or in any deed of title relating to the unit and all such covenants, conditions and restrictions shall run with and bind the land.

(3) Action to enforce the provisions of this section shall be maintainable by the body corporate acting on behalf of the unit owners or by an aggrieved owner.”

25. Consequently, any action to enforce any restrictions set forth in the Declaration may be properly commenced either by the body corporate, or by an aggrieved unit owner. In this case, both brought the action.

26. When one considered all of the aforementioned provisions, the unit restrictions in the Declaration have the force of law. The further question therefore was: whether estoppel by acquiescence is available as a defence to the breach of any of the restrictions contained in the Declaration.

27. In the Privy Council case of Maritime Electric Co. Ltd v General Dairies Ltd- [1937] 1 All ER 748, commended to us by Counsel for the appellants, Lord Maugham said at page 753:

“… where as here, the statute imposes a duty of a positive kind, not avoidable by the performance of any

formality for the doing of the very act which the plaintiff seeks to do, it is not open to the defendant to set up an estoppel to prevent it. This conclusion must follow from the circumstance that an estoppel is only a rule of evidence which, in certain special circumstances can be invoked by a party to an action; it cannot, therefore, avail, in such a case, to release the plaintiff from an obligation to obey such a statute, nor can it enable the defendant to escape from a statutory obligation of such a kind on his part. It is immaterial whether the obligation is onerous or otherwise to the party suing. The duty of each party is to obey the law. To hold, as the Supreme Court has done, that in such a case, estoppels is not precluded, since, if it is admitted, the statute is not evaded, appears to their Lordships, with respect to approach the problem from the wrong direction; the court should first of all determine the nature of the obligation imposed by the statute, and then consider whether the admission of an estoppel would nullify the statutory provision.”

28. In our view, the respondents’ duty as unit owner was to strictly comply with all of the unit restrictions which, as noted, were made binding on them by the Act. Paragraph 15 of the Second Schedule to the Declaration makes it pellucid that no unit owner was to keep any animals on the premises without prior written consent of the body corporate. Clearly, the respondents had no such permission, and estoppel, which is only a rule of evidence available in equity, could not be used to escape their statutory obligations.

29. As previously stated, the respondents did not have prior permission in writing or any written permission at all; and were consequently in breach of the restriction, by which they were bound.

30. Further, the judge’s findings in paragraphs 25, 29 and 30 were inconsistent, for if the first appellant was not duly constituted, then the second appellant could not have induced the respondents by acquiescence on behalf of the body corporate.

31. For the sake of completeness, we set out the relevant provisions of sections 13 and 14 of the Act. So far as are relevant, those sections provide:

“13. (1)The operation of the property shall be vested in a body corporate constituted in the manner provided by this section and such body corporate shall have the powers and duties presented by this Act and the byelaws.

(2). Where a company has been incorporated under the Companies Act to operate a property to which a Declaration relates and provision is made for every owner for the time being of a unit in such property to be ipso facto a member of such company as of right, such company shall, if the Declaration so provides, be deemed to be a body corporate for the purposes of this Act. In any other case, as from the date of recording of a Declaration, all the owners from time to time of the units in the property to which the Declaration relates shall constitute a body corporate by virtue of the Act under such style and title as is prescribed by the Declaration.

(3). A body corporate constituted under the Act shall be a non- profit making body which shall have perpetual succession and a common seal, shall be capable of suing and being sued in its corporate name and shall have such powers and duties as are prescribed by this Act or contained in bye laws for the time being in force.

(4) In particular, the body corporate may-

…

… 14. (1) The duties of the body corporate shall include the following-

(a) to operate the property for the benefit of all unit owners and to be responsible for the enforcement of the bye laws;

…

(f) to carry out the directions of the unit owners expressed by resolution or otherwise as may be prescribed by the Declaration or the byelaws; and

(g) to carry out any other duties which may be prescribed by the Declaration or bye laws.”

32. It was for all of the above reasons that the appeal was allowed and the declaration made that the respondents were in breach of paragraph 15 of the Second Schedule to the Declaration of the Cresta Bella Condominium. As a result of this finding, we also awarded the costs of the appeal and the costs in the court below to the appellants to be taxed if not agreed.

______The Honourable Dame Anita Allen, P

The Honourable Ms. Justice Crane-Scott, JA

The Honourable Mr. Justice Jones, JA