Kafel v Intestate Estate of Barclay Cooper [2010] LRSC 36 (30 August 2010)
Mohammed Kafel of the City of Monrovia, Liberia RESPONDENT/APPELLANT VERSUS The Intestate Estate of the Late Elizabeth Barclay Cooper by and thru its Administrators Elise Adelaide Cooper and and Manpories Ellen Cooper of the City of Monrovia, Liberia PETITIONERS/APPELLEES
PETITION FOR CANCELLATION OF LEASE AGREEMENT
APPEAL FROM THE CIVIL LAW COURT, SIXTH JUDICIAL CIRCUIT, MONTSERRADO COUNTY, REPUBLIC OF LIBERIA.
Heard: March 29, 2010. Decided: August 30,2010.
MR. JUSTICE JA’NEH DELIVERED THE OPINION OF THE COURT.
His Honor, Peter W. Geneweleh, presiding by assignment over the Civil Law Court, Sixth Judicial Circuit, Montserrado County, sitting in its December A.D. 2007 Term, entertained a petition for cancellation of agreements of lease. The petition was filed by appellees, petitioners below against the herein appellant/respondent, Mohammed K. Kafel. Consequent upon conduct of a regular trial, Judge Gbeneweleh, on July 30, 2009, entered a final decree in favor of the appellees. The decree reads thus:
“….THIS COURT HEREBY DECREES THAT THE lease agreement as well as the extension of the lease agreement is hereby cancelled and of no legal effect without prejudice to the respondent to negotiate with the petitioner for a new lease agreement, if he so desires.
This court also DECREES that the sum of US$20,000.00 received from the respondent as rental for the extension of the lease agreement commencing from 2025 for ten (10) years should be refunded to the respondent by the petitioners….”
It is to this final judgment appellant has excepted and appealed therefrom. Appellant not only urged reversal of the final decree, but has also launched vigorous attack thereon, questioning its legal soundness. Predicated thereupon, appellant has tendered a ten- count bill of exceptions before this Court for our review.
Of the ten (10) count- bill of exceptions tendered by appellant, we have determined counts 1, 2, 5, 8 and 10 as deserving our attentive consideration. Our examination of these counts as well as other relevant points in the transcribed records, suggest the following two substantive issues as determinative of the controversy at bar:
(1) Whether the final decree cancelling the 1963 agreement of lease for 61 year as well as the 2006 agreement extending same by 15 years, is supported by preponderance of the evidence to warrant cancellation of said agreements?
(2) Did appellees’ pleadings meet the standard of specificity and particularity both in law and in fact to authorize a finding on fraud?
Addressing these in issues in order of sequence, we take recourse to the records. The first question we consider now is whether the decree entered by the trial court cancelling the 1963 agreement for 61 year as well as the 2006 agreement extending the 1963 agreement by 15 years, is support by the evidence and the laws applying.
In counts 5 (five) 8 (eight) and 10 (ten) of the bill of exceptions, appellant maintains as follows:
“5. That in the petition, the petitioners’ request for cancellation and their prayer was based on the alleged refusal of the respondent to negotiate the consideration in the Lease Agreement and because he refused to renegotiate, they prayed for cancellation.
Respondent says Your Honor committed a reversible error when you agreed with the position as stated above and decreed cancellation; ignoring the fact and law that inadequate consideration is not a ground for a Bill of Equity to cancel a contract on charges of fraud.”
“8.And Your Honor also committed a reversible error when you ignored the fact that the late Madam Elizabeth Cooper and her Administratrixes received and benefited from money paid for the rent of the place without duress and cohesion. Yet Your Honor ruled that their attempt to receive the contract was proper.”
“10. That Your Honor willfully committed a reversible error when you failed to take into account that the petitioners were not the lessors when these agreements (the 1963 agreement and extension) were executed. You also failed to take note that the purpose of leasing the lot (property) was for the Lessee to build, erect and construct structures without any limitation. You also inadvertently overlooked the fact that the Administratrixes had not shown the extension and the lease were secured by fraud. You also inadvertently overlooked the fact that subsequent to coming to court, these people demanded and received money as benefits or fruits of the transaction which they complained of. For all of these, your ruling under the law is a fit subject for review and reversal.”
In the counts immediately above recited, appellant has substantially contended that the final decree cancelling the two agreements for 61 years as well as that of 2006 extending the 1963 agreement by 15 years, was neither founded on the evidence adduced during trial nor supported by the laws controlling in the premises. This contention necessitated a very careful review of the entire records.
We gather from inspection of the transcribed records to this Court that appellees introduced two witnesses in support of their petition for cancellation. The principal contention in their petition before the trial court was that the two agreements were secured by means of deception and artifice perpetrated by appellant.
Appellees’ first witness, Elise Adelaide Cooper, testified in chief as follows:
“In 1963, my Mother, Elizabeth Barclay-Cooper thru her attorney-in-fact, Anthony Barclay entered into a lease agreement with Paterson Zochonis Company for two lots situated on Warner Street, (the Beach side), Sinkor for the three consecutive 21year periods. The last 21 year period ran from 2005 to 2026 for the amount of US$1,210.00 per year. When the Paterson Zochonis company left in 1986, they assigned the property to one Ahmed Fandoun. By then, P. Z. Company had constructed six apartments building on the property. Mr. Fandoun kept the property for 12 years. In 1999, he came to my mother’s house in sinkor with one Mr. Mohamed Kafel, gave my mother a letter, which had no date on it saying that he had assigned the property to Mohamed Kafel; that from then on, Mr. Mohammed Kafel would be her new tenant. He also said that he has paid the rent up to 1999. Although the lease did not end until 2026, Mr. Mohamed Kafed came to my mother few days later and asked for an extension of 15 years, taking the lease to 2041. My mother first did not agree because [she felt] the lease was already long. [B]ut he kept coming begging her to extend. Then (finally! he told her that he will pay her the (full! amount for ten years for the rent of US$2,000.00 per year if she will grant him the extension.” [Our Emphasis].
“Because my mother needed the money, in the end she gave him [the extension] against her daughters’ wishes. By this time, she was almost 81 years old. [But] when it was time to collect the money, we went to Mr. Mohamed Kafel’s office and instead of giving her the full amount he had promised, he gave her small amount and a promissory note to pay. So this was a big disappointment to my mother who had granted the extension based on his promise. When she went again [for the] money, he paid another small amount of money and with a promissory note and he kept paying this [money] in pieces until her death. He never finished paying until her death. My mother always complained how Mr. Mohammed Kafel had tricked her into agreeing to something that he did not honor. When we became administratrixes, we decided to again look into this matter of the unfair lease. We consulted a lawyer who advised us that the only way to resolve the case was to collect the balance from Mr. Mohammed Kafel, which was due my mother. [The lawyer said] that we did not have case [to go to] court. Based on this erroneous advice, we agreed to receive the balance and sign a memorandum of understanding with Mr. Kafel. Even though [at that time] he said that he will pay, he [again] came with a small amount and post dated check for several months down the line advance. Meanwhile, Mr. Mohammed Kafel was enriching himself considerably on the property. In 2007 when we approached Mr. Mohammed Kafel as landlord to tenant because we were not still satisfied with the agreement, and requested to renegotiate the lease for equitable amount, he did not agree. We offered to him to buy the lease because of the [small] amount the US$1,210.00 we were receiving was practically nothing for such a valuable piece of property. He agreed and asked us to submit an appraisal of the property so that he would make an informed offer. To do the appraising, we engaged the Ministry of Public Works. Mr. Mohammed Kafel was cooperating and [he] allowed entry to the premise. I recommended the appraising team to the property.
When I entered the property, I was surprised to see an additional building on the property; also the compound seems much larger. When I asked what he has done, he told me that he knocked down the fence and divided our property from that of Mr. Hilary Dennis thereby joining the two property/ies into one compound. When I confronted him, he answered: “But I didn’t do bad”; and I said yes, you did because this property does not belong to you and you made all of these changes without permission from the family. I later found out that he has asked Mr. Dennis’ permission; but he did not ask permission from me and my sister.
“After the appraising took two days inside and outside, I personally delivered a copy of the appraisal to Mr. Mohammed Kafel. He scheduled a meeting at his office to make an offer. Although the property was appraised over the amount of US$411,000.00, he told us the best offer would be the amount of US$2,000.000 per year. Because he could not come to any agreement, I suggested that we meet with our both lawyers so that they could facilitate the process. Cllr. [Korboi Lavella] Johnson sent an invitation letter to Mr. Mohammed Kafel in November for 12:00 noon [meeting]. We were in the office and Mr. Mohammed Kafel did not appear. When he was called by Counselor Johnson, he said he did not know about the noon meeting, so he was not there. He finally appeared without his lawyer at which time he refused to negotiate or buy the property and stormed out of the office saying that he has a legitimate lease and will hold it until the expiration. He also denied receiving a copy of the appraisal [report] which I delivered to him personally. [Due to] Mr. Kafel’s unwillingness to come to an amicable solution to the problem, we decided that the only action was to seek justice in the court. This is all that I know.”
Appellees’ second witness was co-administratrix of the Intestate Estate of Elizabeth Barclay-Cooper, Majorie Cooper. She told the court as quoted:
“In 2001, Mr. Ahmed Fandoun who had an unexpired lease agreement with my mother, Elizabeth Barclay Cooper came to her house with Mr. Mohammed Kafel. [Mr. Fandoun] told her that Mr. Mohammed Kafel will be taking over his unexpired lease agreement that he Fandoun had with her. Shortly thereafter, Mohammed Kafel came to my mother, Elizabeth Barclay Cooper and asked her to extend the lease agreement with him. My mother was 81 years old at the time [and] very sick. Because of medical expenses, and because I was also ill, she agreed for the extension. He was paying at the time for the property only US1,210.00 per year. He promised my mother to pay the amount of US2,000.00 per year and would pay US$20,000.0o in advance if she agreed to extend the lease agreement. She agreed to this. To her disappointment, Mr. Mohammed Kafel began giving her the money in small amount after interval. She was very disappointed; she never got the full amount promised. Shortly thereafter, she died. My sister Elise Cooper and myself tried to negotiate with Mr. Mohammed Kafel for more equitable agreement for [my mother’s] property on Warner Avenue. Mr. Mohammed Kafel could not allow us to even enter the gate. When my sister Elise tried to enter the premises, she was stopped by his security, who said they had strict instruction from Mr. Mohammed Kafel not to allow her to enter.
It was then we found out the reason for Mr. Mohammed Kafel’s behavior: he was renting the apartments out to United Nations personnel; he had altered the structure of the building; he had broken down the fence and joined our property to that of Mr. Hilary Dennis’, all without our consent.
“At this point in time, Mr. Mohammed Kafel had refused to re-negotiate the amount for equitable lease agreement; he has refused to explain why he made all of these structural changes; he has refused to explain why the fence was broken down and our property joined together to that of Mr. Hilary Dennis’. Up until present, we are not allowed to enter the premises to see what has become of our property. I rest.”
During cross examination, appellees’ second witness was asked the following questions:
Question: Madam Witness, am I correct to say that the US$20,000.00 for the extension you referred to had been fully paid by Mr. Mohammed Kafel?”
Answer: “The amount of US$20,000.00 was never fully paid; he gave her the money in small, small amounts and she never received the full amount promised before she died.”
Both in their depositions and arguing before this Bench, appellees’ counsel urged us to carefully consider the attendant circumstances under which these agreements were concluded. They argued that it was simply the inducement to pay their late mother the lump sum amount of twenty thousand United States dollars (US$20,000.00) in advance that secured the 15 year extension. They insisted that there could be no other rational explanation for anyone to have granted additional 15 years in the year 2000 to the life of a 1963 executed agreement with two optional periods of 21 years each and ending in 2026. In furtherance of said inducement and artifice, according to appellees, appellant also offered to increase the annual rent from US$1,210.00 to two thousand United States dollars (US$2,000.00) per annum. But contrary to this promise and understanding to pay the lessor the lump sum amount of US$20,000.00 upon signing of the extension agreement, appellant suddenly changed his position the moment he secured the lessor’s signature. Appellant instead began paying the lessor in bits and pieces and continued payment mode and manner long after the demise of the lessor on December 28, 2001.
In support of their oral testimonies, appellees testified to copies of the extended lease and a note from appellant promising to pay US$4,840.00 (four thousand eight hundred and forty United States dollars) on the amount the lump sum amount of US$20,000.00, which should have been paid in advance. These instruments were admitted into evidence.
On further inspection of the instruments admitted into evidence, we discovered a receipt dated January 8, 2005. Said receipt acknowledged receiving a post dated check bearing serial number 0000484. The date inscribed on said check is March 15, 2005. The said post dated check represented “balance payment of rent due covering 10 years of the extension period for the lease agreement between Mrs. Elizabeth Cooper and Mr. Mohammed K. Kafel.”
In our opinion, this receipt supports the following conclusions: that the US$20,000.00 advance agreed to be paid in a lump sum in consideration for the extension agreement was, to the contrary, settled in a manner inconsistent with what the parties mutually understood to be the consideration for the extension agreement executed in 2006. Appellant has not disputed that balances on the US$20,000.00 were finally settled years subsequent to the death of the lessor, Mrs. Elizabeth Barclay Cooper.
Testimonies offered in evidence by appellees, and not denied by appellant in substance, indicate that both their late mother, who was in her eighties and one of her children were very ill at the time of execution of the 2006. In other words, the lessor, it would appear, desperately needed the lump sum US$20,000.00 to attend to pressing medical needs. The promise by lessee to pay lessor the lump sum amount of US$20,000.00 upon signing the extension agreement was unarguably the inducement on the part of the lessee and the consideration on the lessor’s part for executing the 2006 agreement.
During his testimony in chief, appellant denied approaching the lessor for extension. He admitted however that when he was approached for advance rental payment, “I asked them what they can do for me. So she offered me fifteen additional years effective at the end of the optional periods which I suppose to give them the amount of US$2,000.000 per annum and I made the money available and the lease agreement was signed by the late Cooper .”
So the question is, what money did appellant pay out to the lessor as he claimed in his testimony when he testified that; “…I made the money available and the lease agreement was signed by the late Cooper.” For as far as records before us show, the balance payment on the US$20,000.00 was paid about four years after the death of the lessor who entered the agreement for the consideration to be able to attend to her medical needs. The lessor was in a dire state of health and needed ready money to attend to urgent medical situation. Along this line, the following important question was posed to appellant during cross examination:
Question: “Mr. Witness, you informed this court that Mrs. Elizabeth Barclay-Cooper came to you and requested you to pay her an assignment of lease in advance and in bulk and you in turn ask her according to you, that if I pay you in bulk, what will you do for me? In your own testimony, Mrs. Elizabeth Cooper, now deceased who died at the age of 81 from the clear blue sky told you that she would extend the assignment for fifteen more years; that is to say 2026-2041. For that consideration, according to you, did you pay Mrs. Elizabeth Barclay Cooper the US$20,000.00 which induced her to grant you an extension; did you pay Mrs. Elizabeth Barclay the promised amount?
The trial court improperly sustained objection made by appellants’ counsel to this important question. Nevertheless, on more careful inspection of the records, we observed that appellant provided answer to similar query during direct examination. The answer was: “when the lease agreement was signed, I made some payments to the late Elizabeth Barclay-Cooper and also to Elise Cooper. She has been signing for the rest of the money
So what “rest of the money” was appellant referring to? Because in his testimony earlier, appellant had said: “…. I suppose to give them the amount of US$2,000.000 per annum and I made the money available and the lease agreement was signed by the late Cooper .”
In view of the attendant circumstances, “what was one the consideration which materially impelled the execution of the 2006 lease agreement?” becomes the decisive question one may ask.
Having critically examined and surveyed the facts and circumstances obtaining in the case at bar, this Court is unable to agree with appellant that the element of consideration was satisfactorily discharged for legal execution of the May 22, 2006 extension agreement. It is settled law in this jurisdiction that consideration is one of the three required elements to the validity and enforceability of a contract.
17A Am Jur 2nd, Contracts, section 106 (2004), provides:
“Consideration is an essential element of, and is necessary to the enforcement or validity of, a contract. It follows from this rule that a promise not supported by any consideration cannot amount to a contract or be enforced, and that want or lack of consideration is an excuse for nonperformance of a promise or grounds for unilateral recession.”
Also in Gooding v. The Intestate Estate of the Late Thomas T. Toomey, a case reported in [1998] LRSC 5; 38 LLR 534 (1998), text at page 542, consideration was defined by this Court as:
“The inducement to a contract; the reason or material cause of a contract; …some right, interest, profit or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility, given, suffered, or undertaken by the other.”
It is our considered opinion that the consideration for the 2006 agreement was the lump sum payment of US$20,000.00; in light of the circumstances of this case, it is also our conclusion that appellant did not give the anticipated consideration, the material inducement impelling the lessor to execute the 2006 agreement.
During his testimony in chief, appellant attempted to impress the court that it were the appellees who approached him and made the offer to extend the agreement. While on the witness stand, he testified that:
“….the late Mrs. Cooper and her children came to me and asked me for some money against some of the lease, advance payment and I said I do not mind. I asked them what they can do for me. So she offered me fifteen additional years effective at the end of the optional periods [for] which I [was] supposed to give them the amount of US$2,000.000 per annum. I made the money available and the lease agreement was signed by the late Cooper and it was witnessed also by her two children. Now they are the administratrixes of the property. And since then, everything was okay and I have been paying the money annually to Mrs. Elizabeth Barclay Cooper. After she died, her daughter Elise has been receiving the money up to the year 2008.
“In 2008, when she returned from Ghana, she proposed to me that she wanted to sell the property, my answer was I cannot own land in this country. She said okay I am going to find somebody to buy the property and I said fine. The person who wants to buy the property [should know] I have a lease up to 2041. Surprisingly, after that, I received invitation from her lawyer and they said that they wanted to cancel the lease agreement because she wants to sell the property and the property should be vacated and they would reimburse me for the money I paid them as an advance. And I said no; this cannot happen. In 2000, the renovation that I did was closed to the amount of US$440,000.00 and they said that they will take me to the court. And that his why] we are in court today. I rest.”
We cannot fully understand why this is important. In concluding a valid and enforceable agreement/contract, who made the offer is never the decisive question as the satisfaction of the elements of the contract. But by appellant’s own words that: “when the lease agreement was signed, I made some payments to the late Elizabeth Barclay-Cooper and also to Elise Cooper. She has been signing for the rest of the money “, it cannot be said that anticipated consideration was paid. In addition, appellant’s statement just quoted, is in sharp contrast to what he told the court in his testimony in chief: “I made the money available and the lease agreement was signed by the late Cooper and it was witnessed also by her two children.” The impression appellant sought to convey to the trial court by his statement is obvious and clear. That is, the contract was a done deal. But this Court has seen it differently.
Be as it may, the statement made by appellant that he made the money available, as hereinabove quoted, supports one conclusion: appellant knew and indeed accepted that the lump sum advance payment of US$20,000.00 was the consideration and material reason impelling the execution by the lessor of the extension agreement of 2006. That said consideration was not given in a mutually understood manner is evidenced by the records before us. These records indicate that from December 30, 2000 when the lessor affixed her signature to the extension agreement until her death almost one year thereafter in 2001, appellant failed to pay the consideration as anticipated to enable the lessor to attend to her urgent medical situation. The promissory note appellant executed acknowledging balance indebtedness as well as his issuance thereafter of a post dated check to settle balance payment of what was intended to be a lump sum payment in the amount of US$20,000.00, made appellant’s denial, to say the least, ludicrous.
Under these circumstances, it is difficult to reject appellees’ substantive contention that the lessor was tricked into this enterprise, and in addition, that there was no consideration made as a matter of law to make said agreement valid and enforceable.
In common law jurisdiction such as ours, want or lack of consideration could amount to grounds for unilateral recession. As earlier stated and we restate here:
“Consideration is an essential element of, and is necessary to the enforcement or validity of, a contract. It follows from this rule that a promise not supported by any consideration cannot amount to a contract or be enforced, and that want or lack of consideration is an excuse for nonperformance of a promise or grounds for unilateral recession.” 17A Am Jur 2 nd , Contracts, section 106 (2004).
The relevant counts as tendered by appellant on the question of consideration, being unfounded both in law and the obtaining circumstances of this case, are therefore dismissed. “Did appellees’ pleadings meet the standard of specificity and particularity both in law and in fact to authorize a finding on fraud?” is the second issue we will now proceed to address. In the following counts, appellant has argued as stated:
“1. That in the entire petitioners’ petition, that is, from counts 1 — 14, there is no mention of fraud neither did the petitioners pray for the cancellation of the Agreement on the basis for fraud. Yet, Your Honor erroneously decreed canceling the lease agreement and its extension on the basis of fraud. This is a reversible error.
“2. That in all cases, circumstances constituting fraud or mistake must be stated with particularity. Yet in the instant case, the petitioners did not mention anything, expressly or by implication of fraud in their petition, including their prayers before this court as contained in the said petition. Yet Your Honor inadvertently ruled and decreed that the respondent committed fraud and therefore the Agreement and its extension were proper subjects for cancellation. That Your Honor sua sponte declaring fraud without any evidence or proof constitutes a reversible error.
“3. That under the law, cancellation of a lease agreement is obtained where the lease was secured by fraud, misrepresentation or misinformation. That is, the fraud or misrepresentation complained of must be the influencing factor at the initial stage of the formation or execution of the said agreement. In the instant case, throughout the record, the testimonies of the petitioners did not state, establish and prove that the 1963 Agreement executed by and between Elizabeth Cooper by and thru her Attorney-In-Fact, Anthony Barclay as lessor and Paterson Zochonis and Company, Ltd. previously assigned to Ahmed Fandoun and subsequently assigned to Mohamed Kafel was secured by fraud or misrepresentation, either expressly or by implication. Yet, Your Honor proceeded to decree cancellation on the basis of fraud which was never stated, established and proved in the petition and at the trial. This constitutes a reversible error.”
“4. That in the petition and subsequently at trial, the petitioners complained and prayed that because the respondent violated the terms of the agreement by constructing and building additional structures the agreement and its extension should be cancelled. Respondent says that the land under lease was originally an open land; and given the intent and spirit of the agreement, the lessee obtained the rights and privileges to construct building thereon for any purpose and doing so was neither a violation of the terms and provision of the lease agreement nor fraud or misrepresentation. Yet, in the face of these facts and circumstances, Your Honor inadvertently ruled and decreed the cancellation of the said Lease Agreement of 1963. This constitutes a reversible error.”
In the counts above recited, appellant has contended that in the body of their petition, appellees did not particularly alleged fraud contrary to the laws applying. According to appellant, it is settled law in this jurisdiction that in all such cases, the circumstances constituting fraud or misrepresentation must be stated with specificity. Appellant insists that appellees having failed to mention fraud either expressly or by implication to satisfy this legal requirement, the judge’s final decree canceling the agreements of 1963 and 2006, respectively based on fraud and cheating must be reversed as a matter of law.
The records reveal that on December 7, 2007, appellees, petitioners below, venued a fourteen- count petition before the Civil Law Court. In the petition, appellees sought to cancel the agreement of lease of 1963 entered between appellees’ late mother, Elizabeth Barclay Cooper and a British Firm, Paterson, Zochonis & Company, Ltd on the one hand, and a May 22, 2006 agreement of lease extending by 15 years the 1963 agreement, executed between Elizabeth Barclay Cooper and appellant-assignee of the 1963 agreement. The petition for cancellation was principally predicated on allegation of inducement, misrepresentation and unconscionability said to have been perpetrated by appellant in securing the said agreements.
Appellees averred in the relevant counts in the petition for cancellation of the agreement of lease as follows:
“6. Petitioners say that while the several optional periods had not expired, respondent as a way of inducing their late mother informed the deceased that he would pay her ten thousand United States dollars (US$10,000.00) in advance if she agreed to extend the existing lease which expires in 2026 for another fifteen [years], that is up to 2041 at the rental amount of two thousand United States dollars, (US$2,000.00) per annum. Petitioners further say that by the time of this inducement perpetrated by the respondent, their late mother was far advanced in age and was eighty years old and by then she would make decisions confusingly because by then she did not allow anything to bother her.” Amongst others, appellees maintained that the 1963 agreement especially the extensions made thereto must be cancelled and made void to all intents and purposes for reason that they are unconscionable.
“7. That petitioners further say as to count six (6) hereinabove, the respondent continuously harassed their late mother until the within named respondent was able to obtain an extension on the old lease under the pretext that he would pay US$10,000.00 on the extended lease in advance, but upon signing the new extension of the lease, the respondent changed his position and began paying the lessor in bits and pieces, but from the existing optional period and not what he promised which was to take the payment from the extension since this rental amount was US$2,000.00 instead of US$1,210.00, same being rental on the last optional period. Attached hereto and marked Exhibit ‘L/4’ in bulk are copies of the extended and a note from respondent promising to pay US$4,840.00 on the US$10,000.00 which should have been paid in advance to form cogent part of these proceedings.”
“10. Petitioners say that while all these acts of respondents continued, the said respondent without any respect for the petitioners nor the lease hold on the estate engaged in massive structural defacing and alteration of the demised premises and the said respondent erected another building on the demised property and joined the said property with that of Hilary Dennis’ property which is a total breach and violation of the lease agreement in force, hence cancellation is the only remedy.”
Also in their prayers, appellees amongst other things prayed court to grant the relied being sought “because of the unconscionable nature of the long lease along with all the extensions must be cancelled and made void to all intents and purposes.”
Both in their pleadings and during argument before this Court, appellees have repeatedly insisted that both the 1963 agreement and 2006 extension agreement were unconscionable.
Unconscionability is defined in law as “extreme unfairness”. Black’s Law Dictionary (Eight Edition). According to Black’s Law Dictionary, what is considered as grossly unfair or unconscionable is normally assessed by the following objective standard:
“(1) One party’s lack of meaningful choice, and
“(3) Contractual terms that unreasonably favor the other party.”
We must also indicate that in common law jurisdictions, courts of law often do not reject recession of contracts judicially determined to be unconscionable. An often cited authority on the question of unconscionability is the case: William v. Walker-Thomas Furniture Co., [1965] USCADC 396; 350 F.2d 445 (D.C. Cir. 1965).
The appellee in the William case, Walker-Thomas Furniture Company, operated a retail furniture store in the District of Columbia. Appellant was a welfare mother caring for seven children. While on a monthly salary of US$218.00, appellant purchased some household items from appellee under an agreement which required appellant to make monthly installment payments.
The contract substantially retained title to the purchased items in appellee until full payments were made. Along this line, the contract also provided that appellee could repossess the purchased items in the event of a default in the monthly payment. At the time appellant defaulted on the monthly payments, the value of the items purchased under the contract stood at US$1,800.00 when. As a result of the default and armed with the contract instrument, appellee sought to replevy all the items purchased.
The Court of General Sessions granted judgment in favor of appellee and its decision was affirmed by the District of Columbia Court of Appeals. On appeal however, the District of Columbia Circuit granted relief to the appellant emphasizing “unconscionability” as a ground therefor. The Court noted that:
“Unconscionability has generally been recognized to include an absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favorable to the other party. Whether a meaningful choice is present in a particular case can only be determined by consideration of all the circumstances surrounding the transaction. In many cases the meaningfulness of the choice is negated by a gross inequality of bargaining power. The manner in which the contract was entered is also relevant to this consideration. Did each party to the contract, considering his obvious education or lack of it, have a reasonable opportunity to understand the terms of the contract, or where the important terms hidden in a maze of fine print and minimized by deceptive sales practices? Ordinarily, one who signs an agreement without full knowledge of its terms might be held to assume the risk that he has entered a one-sided bargain. But a party of little bargaining power, and hence little real choice, signs a commercially unreasonable contract with little or no knowledge of its terms, it is hardly likely that his consent, or even an objective manifestation of his consent, was ever given to all the terms. In such a case the usual rule that the terms of the agreement are not be questioned should be abandoned and the court should consider whether the terms of the contract are so unfair that enforcement should be withheld.”
In the case at bar, appellees’ pleadings recounted an array of allegations of misrepresentation and inducement said to have been perpetrated by appellant against appellees as a means of securing the 2006 extension agreement. In our opinion, the allegations as stated in appellees’ pleadings appear to fall within the liberal meaning of fraud and the objective standard to be used including examining the attendant circumstances under which a contract was concluded.
This Court, adopting a common law definition, has held that to constitute fraud, what must have been made is “some misrepresentation, deceit, devices, or artifice used by one person with the intent or for the purpose of misleading another to his injury deception practiced in order to induce another to part with property or to surrender some legal right and which accomplishes the end designed; [for] Under appropriate circumstances, even the most innocent representation may be sufficient to authorize cancellation of an instrument. It is universal rule of evidence that where fraud is alleged it need not be proved directly but may be adduced or presumed from the circumstances surrounding the transaction.” Harmon v. Republic, 24 LLR176,180-1 (1975).
We have observed a galaxy of allegations made by appellees of deception and cheating against appellant. However, while these allegations are within recognized limits of what is generally considered to be fraudulent circumstances, as to whether appellees by evidence satisfactorily sustained these allegations, is entirely a different question.
Carefully we have considered the total evidence upon which the trial court decreed cancellation of both the 1963 lease agreement as well as the 2006 extension thereto. For the lack of consideration, as herein explained, as well as its unconscionable nature, it is our firm opinion that the evidence introduced by appellees was satisfactory and adequate, for all intents and purposes, to support a finding for annulment of the 2006 extension agreement.
On the other hand, we sustain appellant’s contention as recited in the bill of exceptions that the trial proceedings were void of showing that fraud was perpetrated to secure the 1963 agreement. Consulting the terms and conditions of the 1963 agreement, we have not been able to reach the interpretation being urged upon us by appellees that erection of a new structure on the demised premises, amounts to perpetration of fraud against appellees. At the same time, our diligent search notwithstanding, we did not see the evidence to demonstrate clearly and convincingly the unconscionability of the 1963 agreement. We agree with the appellant therefore that the judge was clearly in error when he so decreed.
Accordingly, we here affirm in one part and reverse in the other part, the July 30, 2009 decree granting cancellation, as follows:
Part of the decree annulling the 2006 Agreement of Lease extending the 1963 Agreement of Lease by 15 (fifteen) additional year- period, is hereby affirmed.
The amount of US$20,000.00 ordered refunded to appellant as detailed in this opinion is also affirmed.
As to the 1963 agreement, the portion of the decree ordering cancellation thereof is hereby reversed.
THE CLERK OF THIS COURT is hereby ordered to send a mandate to the judge presiding in the court below to resume jurisdiction and give effect to this judgment. AND IT IS HEREBY SO ORDERED.
Cllr. Mathias Omejia of the Omejia and Associates Law firm in association with Cllr.
Frederick D. Cherue of the Dugbor Law Firm appeared for appellant. Cllrs. Lavela Koboi
Johnson and Samuel W. Nyazeegbuo of the Century Law Offices appeared for appellees.