B-146528, SEP. 19, 1961

B-146528, SEP. 19, 1961

TO THE SECRETARY OF STATE:

REFERENCE IS MADE TO LETTER OF JULY 21, 1961, FROM THE ASSISTANT SECRETARY REQUESTING OUR DECISION CONCERNING THE LIABILITY OF THE UNITED STATES GOVERNMENT FOR THE ALLEGED LOSSES SUSTAINED BY BALLANTYNE AND COMPANY (PVT) LTD., ON ACCOUNT OF "DELAYS AND DEFAULT" ON THE PART OF THE GOVERNMENT'S REPRESENTATIVES IN THE NEGOTIATIONS LEADING UP TO THE EXECUTION OF THE LEASE ENTERED INTO UNDER DATE OF JULY 5, 1960, FOR THE BALLANTYNE HOUSE, 46 AGWA STREET, SALISBURY, RHODESIA.

WHILE THE CLAIM IS SUBMITTED BY BALLANTYNE AND COMPANY (PVT) LTD., THE NEGOTIATIONS FOR THE LEASE WERE CONDUCTED BY LINDEN INVESTMENTS (PVT) LTD. AND THE LEASE WAS ENTERED INTO WITH THAT CONCERN. IT IS EXPLAINED THAT BALLANTYNE AND COMPANY (PVT) LTD., WAS A FAMILY CORPORATION CONDUCTING A LADIES OUTFITTERS AND DRAPERY STORE BUSINESS; THAT THE SITE PURCHASED FOR ITS NEW SHOP IN SALISBURY WAS PURCHASED IN THE NAME OF LINDEN INVESTMENTS (PVT) LTD.; THAT THE PURCHASE WAS EFFECTED BY BALLANTYNE AND COMPANY (PVT) LTD., TAKING OVER ALL THE SHARES IN LINDEN INVESTMENTS (PVT) LTD.; AND THAT THE SHAREHOLDERS WHO ARE THE DIRECTORS AND MEMBERS OF THE BALLANTYNE FAMILY BECAME THE SAME FOR BOTH COMPANIES. THE MATTER WILL THEREFORE BE CONSIDERED WITHOUT REGARD TO ANY DISTINCTION BETWEEN THOSE TWO CONCERNS.

THE FACTS AS ADMINISTRATIVELY REPORTED SHOW THAT IN JULY 1959 THE AMERICAN CONSULATE BEGAN LOOKING FOR NEW OFFICE SPACE TO HOUSE THE ACTIVITIES THEN OCCUPYING LEASED SPACE IN THE SAVOY HOUSE AND THE EIGHTH AND NINTH FLOORS OF THE BANK OF RHODESIA AND NYASALAND. THE BALLANTYNE HOUSE, CONSISTING OF A GROUND FLOOR AND A FIRST FLOOR, WHICH WAS THEN UNDER CONSTRUCTION/WAS SELECTED AS MEETING THE REQUIREMENTS OF THE CONSULATE GENERAL, SUBJECT TO THE CONSTRUCTION OF ADDITIONAL FLOORS. SINCE THE TWO STORIES THEN BEING COMPLETED CONSISTED OF FOUR SHOPS IT WAS CONCLUDED THAT THE REQUIREMENTS OF THE CONSULATE GENERAL WOULD NECESSITATE ADDING THREE ADDITIONAL FLOORS, INSTALLING LIFTS AND EFFECTING OTHER CHANGES. IT IS REPORTED THAT THE CLAIMANTS WERE VERBALLY INFORMED FROM THE BEGINNING OF THE NEGOTIATIONS THAT THE LEASING OF THE BALLANTYNE BUILDING WAS CONTINGENT UPON OBTAINING RELEASES FOR THE SPACE THEN OCCUPIED BY THE CONSULATE IN THE BANK BUILDING AND THE SAVOY HOUSE AND FURTHER UPON DEPARTMENTAL APPROVAL OF THE LEASE. THE CLAIMANTS, HOWEVER, CONTEND THAT WHILE THEY WERE AWARE THAT THE CONSULATE GENERAL OCCUPIED SPACE IN THE BANK BUILDING THEY WERE UNDER THE IMPRESSION THAT SUCH SPACE COULD BE RELINQUISHED AT ANY TIME AND THAT ONLY AFTER THE ORIGINAL NEGOTIATIONS HAD BEEN UNDER WAY FOR SOME TIME WERE THEY INFORMED THAT THE LEASING OF THE BALLANTYNE HOUSE WAS CONTINGENT UPON THE RELEASE OF THE UNITED STATES FROM ALL LIABILITY UNDER THE LEASE FOR THE BANK SPACE.

IN THE CLAIMANT'S RECAPITULATION OF THE FACT IT IS STATED THAT ON JULY 8, 1959, THEY WERE ADVISED BY ARCHITECTS THAT THE CONSULATE GENERAL REQUIRED SPACE FOR ONLY THREE YEARS AND THAT IT COULD NOT TAKE OCCUPANCY UNTIL THE COMPLETE BUILDING WAS READY WHEREAS THEIR UNDERSTANDING HAD BEEN THAT THE CONSULATE GENERAL WOULD TAKE IMMEDIATE OCCUPANCY OF THE TWO STORIES WHEN COMPLETED AND WHILE THE ADDITIONAL FLOORS WERE UNDER CONSTRUCTION. IT IS STATED FURTHER THAT THIS PROPOSAL WAS REJECTED BY THE CLAIMANTS AND THAT THEY EXPRESSED REGRET THAT THEY COULD NOT CONSIDER CONTINUING THE NEGOTIATIONS.

LATER THE CONSUL GENERAL INDICATED HIS WILLINGNESS TO NEGOTIATE ON THE BASIS OF A SIX-YEAR LEASE FOR THE GROUND AND FIRST FLOORS. FOLLOWING AN INDICATION THAT THE CLAIMANTS WOULD NEGOTIATE ON THAT BASIS THE CONSULATE GENERAL'S OFFICE CONTRACTED THE BANK OF RHODESIA AND NYASALAND AS TO THE POSSIBILITY OF CANCELING THE LEASE FOR SPACE IN THE BANK ON THE EIGHTH AND NINTH FLOORS. AT THE SAME TIME NEGOTIATIONS WERE CONDUCTED WITH THE SAVOY HOUSE MANAGEMENT FOR TRANSFER OF THE LEASE FOR THIS SPACE TO THE CLAIMANTS WHOSE REPRESENTATIVE HAD AGREED TO ASSUME THE GOVERNMENT'S OBLIGATIONS UNDER THE LEASE FOR THAT SPACE UNTIL EXPIRATION THEREOF. ON AUGUST 6, 1959, THE INITIAL TERMS AND CONDITIONS OF THE PROPOSED LEASE FOR THE BALLANTYNE BUILDING WERE SUBMITTED TO WASHINGTON AND ON AUGUST 20, 1959, A DRAFT OF THE PROPOSED LEASE WAS SUBMITTED TO WASHINGTON FOR APPROVAL. AUGUST 21, 1959, THE BANK ADVISED THAT IT WOULD RELEASE THE GOVERNMENT FROM LIABILITY FOR THE EIGHTH FLOOR OF THE BANK BUILDING WHENEVER NOTIFIED BY THE GOVERNMENT AND THAT IT WOULD RELEASE THE GOVERNMENT FROM LIABILITY FOR THE NINTH FLOOR WHEN IT LOCATED ANOTHER TENANT. THE BANK INFORMALLY INDICATED THAT ANOTHER UNITED STATES GOVERNMENT AGENCY WAS INTERESTED IN THE NINTH FLOOR SPACE.

ON SEPTEMBER 3, 1959, THE DEPARTMENT APPROVED THE LEASING OF THE BALLANTYNE HOUSE, SUBJECT TO CERTAIN AMENDMENTS AND CONDITIONS INCLUDING RELEASE FROM THE OBLIGATIONS UNDER THE LEASES FOR THE SPACE IN THE BANK BUILDING AND THE SAVOY HOUSE. ON SEPTEMBER 11, 1959, THE CLAIMANTS WERE INFORMED CONCERNING THE CHANGES IN THE PROPOSED LEASE AS REQUESTED BY THE DEPARTMENT. THE CLAIMANTS REFUSED TO ACCEPT A PROVISION THAT THE RENTALS WOULD BE SUBJECT TO ANNUAL APPROPRIATIONS BY THE CONGRESS AND A 90-DAY TERMINATION PROVISION.

THEREAFTER, ORAL AND WRITTEN NEGOTIATIONS AND DISCUSSIONS CONTINUED DURING SEPTEMBER, OCTOBER AND NOVEMBER 1959 AND IN THE MEANTIME THE CLAIMANTS HAD MOVED INTO PART OF THE BUILDING WITH THE INTENTION OF VACATING SAME BY DECEMBER 31, 1959, SO THAT THE BUILDING COULD BE OCCUPIED BY THE CONSULATE GENERAL IN JANUARY. DURING THIS INTERVAL THE CLAIMANTS INFORMED THE CONSULATE GENERAL THAT THEY WERE UNABLE TO ARRANGE FOR FINANCING FOR THE BUILDING UNTIL ASSURANCE WAS GIVEN THAT THE PROPOSED LEASE WAS ACCEPTABLE TO THE DEPARTMENT. THE CLAIMANTS WERE AGAIN INFORMED THAT NO LEASE COULD BE EXECUTED UNTIL TRANSFER OF THE SAVOY LEASE WAS ARRANGED AND A RELEASE COULD BE OBTAINED FROM THE LEASE FOR THE BANK SPACE.

ON DECEMBER 14, 1959, THE CONSULATE GENERAL WAS INFORMED THAT CERTAIN OFFICES IN THE BANK BUILDING OCCUPIED BY OTHER GOVERNMENT AGENCIES WERE BEING VACATED; THAT THE BANK WOULD OCCUPY THE VACATED SPACE; AND THAT THEREFORE THE BANK WAS OBLIGED TO CANCEL ITS OFFER TO RELEASE THE GOVERNMENT FROM LIABILITY FOR THE SPACE ON THE EIGHTH FLOOR AND THAT IT WOULD NOW REQUIRE NEW TENANTS FOR BOTH THE EIGHTH AND NINTH FLOORS BEFORE RELEASING THE GOVERNMENT FROM ITS OBLIGATIONS UNDER THE LEASE FOR SUCH SPACE. THIS INFORMATION WAS PASSED ON TO THE CLAIMANTS THE FOLLOWING DAY AND THEY WERE INFORMED THAT FURTHER NEGOTIATIONS WOULD HAVE TO BE SUSPENDED UNTIL THE CONSULATE GENERAL WAS FULLY RELEASED FROM ALL LIABILITY FOR BOTH FLOORS OF THE BANK SPACE. THE CONSULATE GENERAL CONTINUED ITS EFFORTS TO DISPOSE OF THE BANK SPACE AND THE CLAIMANT CONTINUED TO PRESS THE CONSULATE GENERAL FOR EXECUTION OF THE LEASE AND THE CONSULATE GENERAL EXPRESSED THE HOPE THAT THE BANK SPACE COULD BE RELET BY THE TIME THE BALLANTYNE HOUSE WAS READY FOR OCCUPANCY BY THE CONSULATE GENERAL. BY LETTER DATED DECEMBER 22, 1959, THE CLAIMANTS ADVISED THE CONSULATE GENERAL THAT THEY WERE LIQUIDATING THEIR BUSINESS WHICH WAS THEN OCCUPYING PART OF THE BALLANTYNE HOUSE AND THAT THE MATTER OF THE LEASE FOR THE BUILDING WOULD HAVE TO WAIT THE RETURN OF FOUR OF THEIR SIX DIRECTORS WHO WERE TOURING SOUTH AFRICA. THE CLAIMANTS EXPLAINED THE DIFFICULTIES CONFRONTING THEM ARISING FROM THE DELAY IN EXECUTION OF A LEASE FOR THE BALLANTYNE HOUSE AND THEY URGED THAT EVERY EFFORT BE MADE TO SECURE THE DEPARTMENT'S APPROVAL OF THE PROPOSED LEASE "TO ENABLE LOAN TO BE MADE TO US AND BUILDING EXTENSIONS TO COMMENCE.' REPLY THE CLAIMANTS WERE AGAIN ADVISED ORALLY THAT NO LEASE COULD BE SIGNED UNTIL A RELEASE WAS OBTAINED FROM THE BANK FOR THE EIGHTH AND NINTH FLOORS OF THE BANK BUILDING. BY LETTER DATED FEBRUARY 1, 1960, THE CLAIMANTS ADVISED THE CONSUL GENERAL THAT THEY WOULD ASSUME RESPONSIBILITY FOR THE SAVOY HOUSE LEASE AND FOR ONE FLOOR OF THE BANK BUILDING.

FOLLOWING CONTINUED EFFORTS ON THE PART OF THE CLAIMANTS TO OBTAIN A SIGNED LEASE A MEETING WAS HELD BY THE CONSUL GENERAL, THE ADMINISTRATIVE OFFICER AND THE DIRECTORS OF LINDEN INVESTMENTS FOR THE PURPOSE OF REVIEWING THE ENTIRE PROCEEDINGS AND SOLVING THE PROBLEMS THAT HAD PREVENTED THE EXECUTION OF A LEASE. IT WAS AGREED THAT, SUBJECT TO THE APPROVAL OF THE DEPARTMENT, THE CONSUL GENERAL WOULD RECOMMEND TO THE APPROVAL OF THE DEPARTMENT, THE CONSUL GENERAL WOULD RECOMMEND AN INCREASE IN THE RENT FOR THE BALLANTYNE BUILDING OF 80 POUNDS STERLING ($225) PER MONTH. ALSO, IT WAS AGREED THAT RENT FOR THE LEASE OF 5 FLOORS WOULD BE NO LESS THAN 12,960 POUNDS STERLING PER ANNUM AND THAT LINDEN INVESTMENTS COULD APPLY FOR A RENTAL INCREASE AT A LATER DATE. ON FEBRUARY 27, 1960, LINDEN INVESTMENTS ACCEPTED THE FOREGOING TERMS IN WRITING.

ON MARCH 1, 1960, THE CONSULATE GENERAL INFORMED THE DEPARTMENT OF THE PROBLEMS IT HAD ENCOUNTERED INCIDENT TO THE NEGOTIATIONS FOR A LEASE AND REQUESTED APPROVAL OF ITS RECOMMENDATIONS. ON MARCH 11, 1960, THE CONSUL GENERAL NOTIFIED LINDEN INVESTMENTS THAT FOLLOWING SUBMISSION OF ITS RECOMMENDATIONS TO WASHINGTON FOR APPROVAL THE BANK OF RHODESIA AND NYASALAND INDICATED THAT IF NEGOTIATIONS WITH THE CLAIMANTS WERE SUCCESSFULLY CONCLUDED IT WOULD BE WILLING TO RELEASE THE CONSULATE GENERAL FROM LIABILITY FOR THE BANK'S EIGHTH FLOOR SPACE. IN VIEW OF THIS LINDEN WAS ADVISED THAT SUBJECT TO ITS APPROVAL, THE CONSULATE GENERAL WAS PREPARED TO SUBMIT A REVISED PROPOSAL TO THE DEPARTMENT FOR APPROVAL. THE REVISED PROPOSAL CONSISTED OF THE FOLLOWING:

1. LINDEN WOULD ASSUME RESPONSIBILITY FOR THE SAVOY HOUSE LEASE UNTIL EXPIRATION ON NOVEMBER 30, 1960,

2. LINDEN WOULD ASSUME RESPONSIBILITY FOR THE NINTH FLOOR OF THE BANK BUILDING WHEN BALLANTYNE HOUSE IS COMPLETED AND THE CONSULATE GENERAL MOVES THEREFROM AND OCCUPIES THE SECOND, THIRD AND FOURTH FLOORS OF THE BALLANTYNE HOUSE.

3. THE CONSULATE GENERAL WOULD RECOMMEND TO WASHINGTON THAT RENTAL OF THE GROUND AND FIRST FLOORS OF THE BALLANTYNE HOUSE WOULD REMAIN AT 750 POUNDS STERLING UNTIL THE SECOND, THIRD AND FOURTH FLOORS ARE OCCUPIED AND THAT WHEN SO OCCUPIED RENTAL THEN WOULD BE FIXED AT A TOTAL OF 12,960 POUNDS STERLING FOR FIVE FLOORS LEASED BY THE CONSULATE GENERAL.

4. LINDEN WOULD AGREE TO COMPLETE CONSTRUCTION OF THE FIVE FLOORS FOR OCCUPANCY BY THE CONSULATE GENERAL WITHIN SIX MONTHS OF THE EXECUTION OF A LEASE OR BY JANUARY 1, 1961, AT THE LATEST--- THE ENTIRE AGREEMENT TO BE CONTINGENT UPON THIS UNDERSTANDING, ACTS OF GOD, OR CIRCUMSTANCES BEYOND THE LESSOR'S CONTROL EXCEPTED. IT WAS AGAIN EMPHASIZED THAT ALL NEGOTIATIONS CONCERNING THE LEASING OF BALLANTYNE HOUSE WERE SUBJECT TO APPROVAL BY THE DEPARTMENT AND THAT THEY WOULD NOT BE CONSIDERED AS COMMITMENTS OR OBLIGATIONS FOR LEASING THE BUILDING.

ON MARCH 12, 1960, THE PROPOSED LEASE OF THE BALLANTYNE HOUSE WAS APPROVED BY THE DEPARTMENT. WHEN THE DRAFT OF LEASE WAS FORWARDED TO LINDEN IT NOTIFIED THE CONSULATE GENERAL THAT IT DESIRED ONLY AN OPTION IN THE LEASE FOR ASSUMING RESPONSIBILITY FOR ONE FLOOR OF THE BANK BUILDING AND OTHER MINOR CHANGES. THIS WAS CONTRARY TO THE OFFER MADE IN THE CLAIMANTS LETTER OF FEBRUARY 1, 1960, WHEREIN THEY ADVISED THE CONSUL GENERAL THAT THEY WOULD ASSUME RESPONSIBILITY FOR THE SAVOY HOUSE LEASE AND FOR ONE FLOOR OF THE BANK LEASE. THIS NEW TURN OF EVENTS RESULTED IN FURTHER DISCUSSIONS AND IN ADDITION OTHER CONTROVERSIES AROSE CONCERNING THE REMOVAL OF THE STAIRCASES, THE COST THEREOF, AND THE WORDING OF THE PROPOSED LEASE. ON APRIL 28, 1960, LINDEN TRANSMITTED TO THE CONSULATE GENERAL A NEW DRAFT OF LEASE WITH CERTAIN AMENDMENTS RECOMMENDED BY ITS ATTORNEYS AND THE CONSULATE GENERAL WAS INFORMALLY ADVISED THAT LINDEN DID NOT INTEND TO COMPLETE CONSTRUCTION OF THE ADDITIONAL FLOORS OF BALLANTYNE HOUSE UNTIL 1962, A FACTOR WHICH DEVIATED FROM THE AGREED DRAFT OF LEASE. THESE FACTORS AND OTHERS LED TO FURTHER CONTROVERSIES, CORRESPONDENCE AND DISCUSSIONS. ON MAY 25, 1960, THE DEPARTMENT APPROVED THE REVISED LEASE PROPOSAL BUT REQUESTED ADDITIONAL JUSTIFICATION FOR RETAINING THE BANK BUILDING SPACE. ON JUNE 3, 1960, LINDEN ADVISED THE CONSULATE GENERAL THAT THE BUILDERS HAD STARTED WORK TO REMOVE ALL STAIRCASES AND ERECT THE PARTITIONS. THE LEASE (MEMORANDUM OF AN AGREEMENT) AS FINALLY DRAFTED WAS SUBMITTED TO THE CONSUL GENERAL FOR SIGNATURE ON JULY 1, 1960, AND IT WAS SIGNED BY HIM UNDER DATE OF JULY 5, 1960.

THE LEASE PROVIDED FOR A TERM OF SIX YEARS FROM THE DATE OF ACTUAL OCCUPANCY BY THE LESSEE. PARAGRAPH 3 OBLIGATED THE LESSOR TO EXTEND BALLANTYNE HOUSE BY THE CONSTRUCTION OF THE SECOND, THIRD AND FOURTH FLOORS THEREOF IN ACCORDANCE WITH THE PLANS AND SPECIFICATIONS AGREED UPON BETWEEN THE LESSEE AND THE LESSOR'S ARCHITECTS, SUCH WORK TO BE COMMENCED SUFFICIENTLY EARLY IN ORDER THAT THE ADDITIONAL FLOORS WOULD BE READY FOR OCCUPANCY BY SEPTEMBER 1, 1962, EXCEPT THAT THE LESSEE WOULD NOT BE REQUIRED TO OCCUPY THE FLOORS DURING CONSTRUCTION ON FLOORS ABOVE THE FOURTH. PROVISIONS WERE MADE IN PARAGRAPHS 2, 3 AND 4 FOR LESSOR'S LIABILITY FOR THE EXISTING LEASES. PARAGRAPH 6 PROVIDED THAT THE LESSEE WOULD NOT BE BOUND TO OCCUPY THE GROUND AND FIRST FLOORS UNTIL IT ACCEPTED THEM IN WRITING AS READY FOR OCCUPANCY. PARAGRAPH 5 PROVIDED THAT THE LESSOR WOULD BE ENTITLED TO COMPLETE THE ADDITIONAL FLOORS AT AN EARLIER DATE AND TO REQUIRE THE LESSEE TO ENTER INTO OCCUPATION THEREOF, PROVIDED THAT THE LESSOR ASSUMED THE LESSEE'S OBLIGATIONS FOR ONE FLOOR OF THE SPACE OCCUPIED UNDER THE BANK LEASE, EXCEPT THAT THE LESSEE WOULD NOT BE REQUIRED TO OCCUPY THE ADDITIONAL FLOORS DURING CONSTRUCTION. IT WAS STIPULATED THAT THE RENT FOR THE BANK SPACE WOULD NOT EXCEED 273 POUNDS STERLING PER MONTH AND THAT THE LEASE WOULD EXPIRE AUGUST 31, 1962. UNDER PARAGRAPH 12 THE LESSOR WAS REQUIRED TO EFFECT CERTAIN INSTALLATIONS AND ALTERATIONS AND IT ASSUMED THE OBLIGATION FOR ALL EXPENSES INCIDENTAL THERETO.

THE CONSULATE GENERAL TOOK OCCUPANCY OF THE BUILDING ON SEPTEMBER 1, 1960, WHICH OCCUPANCY WAS ACKNOWLEDGED IN WRITING BY THE CONSUL GENERAL ON SEPTEMBER 21, 1960. THE FILE TRANSMITTED WITH YOUR LETTER INDICATED THAT BY LETTER DATED DECEMBER 14, 1960, LINDEN FILED A CLAIM WITH THE DEPARTMENT FOR DAMAGES FOR DELAYS AND DEFAULT ON THE PART OF THE GOVERNMENT'S REPRESENTATIVES AND THAT THE CONSULATE GENERAL TO WHOM THE CLAIM WAS REFERRED ADVISED LINDEN BY LETTER OF FEBRUARY 15, 1961, THAT IT DID NOT RECOGNIZE ANY VALID CLAIM AGAINST THE UNITED STATES. AS INDICATED IN THE ASSISTANT SECRETARY'S LETTER THE GIST OF THE CLAIMANTS' ALLEGATIONS IS THAT IN THE COURSE OF THE NEGOTIATIONS THE REPRESENTATIVES OF THE GOVERNMENT (A) FAILED TO MEET ITS OBLIGATIONS; (B) IMPOSED UNJUSTIFIABLE OBLIGATIONS ON THE CLAIMANT; (C) PROCRASTINATED UNDULY RESULTING IN FINANCIAL PRESSURE AND LOSS TO THE CLAIMANTS COMPELLING THEM TO COMPLY WITH THE DEMANDS OF THE GOVERNMENT, HOWEVER UNREASONABLE; AND (D) INDULGED IN REPRESENTATIONS AND MISREPRESENTATIONS UPON WHICH THE CLAIMANTS RELIED TO THEIR DETRIMENT. AS A RESULT OF THE FOREGOING THE CLAIMANTS CONTEND THAT THEIR BUILDING STOOD VACANT FOR VIRTUALLY A WHOLE YEAR DURING WHICH TIME IT LOST THOUSANDS OF POUNDS AND THEY HAD TO MEET HEAVY BOND INTEREST.

THE FILE SHOWS THAT AT ONE TIME THE CLAIMANTS ESTIMATED THEIR LOSSES AT 55,000 POUNDS STERLING BUT LATER THEY CONSIDERED THAT THEY HAD BEEN DAMAGED AT LEAST TO THE EXTENT OF 10,000 POUNDS STERLING. THEY ASSERT THAT THEY LOST A YEARS RENT FOR THEIR BUILDING WHICH OTHERS WOULD HAVE TAKEN AT 750 POUNDS STERLING PER MONTH, OR A TOTAL OF 9,000 POUNDS STERLING; THAT THEY HAVE LOST INTEREST ON THIS SUM AT 8 PERCENT; THAT UNTIL THEY COMPLETE THE ADDITIONAL FLOORS THEY WILL LOSE INTEREST ON THE MONEY PREMATURELY PAID TO THEIR ARCHITECTS; AND THAT THEY LOST 1,000 POUNDS STERLING IN DOING WORK NOT INCLUDED IN THE ORIGINAL NEGOTIATIONS. IN ADDITION, THE CLAIMANTS CONSIDER THAT SAGIT WHICH LOANED THE MONEY FOR FINANCING CONSTRUCTION SHOULD BE REIMBURSED FOR LOSSES SUSTAINED BY IT IN HOLDING A LOAN OF 96,000 POUNDS STERLING AVAILABLE FOR CONSTRUCTION.

IN A RECAPITULATION OF THE NEGOTIATIONS LEADING UP TO THE EXECUTION OF THE LEASE ATTACHED TO THE CLAIMANTS' LETTER OF DECEMBER 3, 1960, IT IS INDICATED THAT THE CLAIMANTS' POSITION IS THAT "A FULLY BINDING AGREEMENT HAD BEEN ENTERED INTO ON 13TH. OCTOBER IF NOT BEFORE" AND THAT THEY ARE ENTITLED TO DAMAGES FOR BREACH OF AN AGREEMENT IN REFUSING TO FINALIZE A FORMAL LEASE AT THAT TIME. APPARENTLY, THE BASIS FOR THEIR POSITION IS THAT EITHER THE DEPARTMENT'S APPROVAL OF THE LEASE ON SEPTEMBER 3, 1959, OR THE CONSULATE GENERAL'S LETTER OF OCTOBER 13, 1959, ADVISING THE CLAIMANTS THAT "OUR GOVERNMENT HAS AUTHORIZED THE SIGNING OF A FIRM SIX YEAR LEASE, WITH OPTION TO RENEW AT INCREASED RENTAL" CONSTITUTED A VALID COMMITMENT. THE CLAIMANTS' POSITION,HOWEVER, OVERLOOKS THE FACT THAT THE DEPARTMENT'S APPROVAL OF THE LEASE ON SEPTEMBER 3, 1959, WAS, ACCORDING TO THE FACTS AS REPORTED BY THE CONSUL GENERAL,"SUBJECT TO CERTAIN AMENDMENTS AND CONDITIONS OF LEASE AND RELEASE OF SPACE IN THE BANK BUILDING AND IN SAVOY HOUSE.'

WHILE THE GOVERNMENT, ACTING THROUGH ITS AUTHORIZED AGENTS, MAY BIND ITSELF TO THE SAME EXTENT AS ANY PRIVATE PARTY BY AN AGREEMENT TO EXECUTE A FORMAL LEASE IN THE FUTURE EMBODYING TERMS SUBSTANTIALLY AGREED UPON, WHERE IT MANIFESTS AN INTENTION NOT TO BE BOUND IN THE ABSENCE OF THE HAPPENING OF A CERTAIN CONTINGENCY THERE CAN BE NO ENFORCEABLE AGREEMENT UNTIL THE REQUIREMENTS OF SUCH CONTINGENCY HAVE BEEN SATISFIED. IN THIS PARTICULAR INSTANCE, THE FACTS AS ADMINISTRATIVELY REPORTED SHOW THAT DEPARTMENT'S APPROVAL OF THE NEGOTIATIONS AND THE EXECUTION OF THE PROPOSED LEASE WERE SPECIFICALLY UPON OBTAINING RELEASES FROM THE OBLIGATIONS UNDER THE LEASES FOR THE SPACE IN THE BANK BUILDING AND IN THE SAVOY HOUSE TOGETHER WITH OTHER CONDITIONS. UNTIL THE MATTER OF THE RELEASE FROM OBLIGATIONS UNDER THOSE TWO LEASES AND THE OTHER CONDITIONS REFERRED TO IN THE DEPARTMENT'S APPROVAL OF SEPTEMBER 3, 1959, WERE SATISFIED THERE COULD BE NO BREACH OF A CONTRACT FOR FAILURE TO TIMELY EXECUTE A FORMAL LEASE.

THE ADMINISTRATIVE RECORD IS TO THE EFFECT THAT FROM THE BEGINNING OF THE NEGOTIATIONS THE CLAIMANTS WERE SPECIFICALLY INFORMED AND WERE WELL AWARE OF THE CONDITIONS UNDER WHICH THE NEGOTIATIONS AND THE EXECUTION OF THE PROPOSED LEASE WERE AUTHORIZED. WHILE THE CLAIMANTS ADMIT THAT THEY WERE AWARE THAT THE CONSULATE GENERAL WAS OCCUPYING SPACE IN THE BANK BUILDING THEY ASSERT THAT THEY UNDERSTOOD THAT THE LEASE WAS ON A MONTH TO MONTH BASIS AND THAT THE SPACE COULD BE VACATED AT ANY TIME, THEY ASSERT THAT IT WAS NOT UNTIL LATER IN THE NEGOTIATIONS THAT THEY WERE INFORMED THAT THE NEGOTIATIONS AND THE EXECUTION OF THE LEASE WERE CONDITIONED UPON THE GOVERNMENT'S RELEASE FROM LIABILITY FOR THE BANK SPACE. THE CONSUL GENERAL, HOWEVER, HAS REPORTED THAT THE CONSULATE GENERAL AND THE LINDEN INVESTMENTS (PVT)LTD., ENTERED INTO NEGOTIATIONS FOR THE LEASE OF BALLANTYNE HOUSE WITH FULL KNOWLEDGE THAT A LEASE COULD NOT BE SIGNED UNTIL THE CONSULATE GENERAL WAS RELEASED FROM ITS OBLIGATIONS FOR THE SPACE UNDER LEASE IN THE SAVOY HOUSE AND THE BANK BUILDING. THUS, THE QUESTION CONCERNING THE CONDITIONS UNDER WHICH THE LEASING NEGOTIATIONS WERE ENTERED INTO RESOLVES ITSELF INTO A DISPUTED QUESTION OF FACT. SUCH SITUATIONS IT IS THE LONG ESTABLISHED RULE OF OUR OFFICE, WHEN THERE IS A COMPLETE DISAGREEMENT, AS HERE, BETWEEN THE FACTS AS REPORTED BY THE ADMINISTRATIVE OFFICERS AND THOSE STATED BY THE CLAIMANT, TO ACCEPT THE FACTS ADMINISTRATIVELY REPORTED AS CONTROLLING THE DISPOSITION OF THE CLAIM IN THE ABSENCE OF EVIDENCE LEGALLY SUFFICIENT TO OVERCOME THE PRESUMPTION OF THEIR CORRECTIONS. SEE 16 COMP. GEN. 325; 18 ID. 799, 800; 31 ID. 288; 34 ID. 565, 568; AND 37 ID. 568, 570.

WITH RESPECT TO THE LETTER OF OCTOBER 13, 1959, RELIED ON BY THE CLAIMANTS AS CONSTITUTING A COMMITMENT WITHOUT ANY RESERVATIONS, THE CLAIMANTS WERE ADVISED IN THAT LETTER BY THE CONSULATE GENERAL THAT THE GOVERNMENT HAD AUTHORIZED THE SIGNING OF A SIX-YEAR LEASE. IN EXPLANATION OF THE CIRCUMSTANCES UNDER WHICH THE LETTER WAS WRITTEN THE CONSUL GENERAL HAS REPORTED THAT IMMEDIATELY PRIOR THERETO LINDEN IN CONVERSATIONS WITH THE CONSULATE GENERAL ADVISED THAT IT WAS HAVING DIFFICULTY CONCERNING A LOAN FOR CONSTRUCTION OF THE ADDITIONAL FLOORS; THAT IT COULD ONLY OBTAIN A LOAN ON CONDITION OF A FIRM OCCUPANCY OF THE BUILDING; THAT THE LETTER WAS WRITTEN AT THE REQUEST OF LINDEN MERELY AS EVIDENCE OF THE CLAIMANTS' CREDIT RELIABILITY; AND THAT THE NEGOTIATIONS AT THAT TIME WERE BY NO MEANS COMPLETE.

IT IS OBSERVED THAT THERE IS NOTHING IN THE LETTER OF OCTOBER 13, 1959, INDICATING THAT THERE HAD BEEN ANY CHANGE OR WAIVER OF CONDITIONS UNDER WHICH THE DEPARTMENT AUTHORIZED THE NEGOTIATIONS OR THE EXECUTION OF THE PROPOSED LEASE IN THE FIRST INSTANCE. IN ANY EVENT, EVEN IF THE LETTER COULD BE INTERPRETED AS CONTENDED FOR BY THE CLAIMANTS, IN THE ABSENCE OF A SHOWING THAT THE DEPARTMENT HAD WITHDRAWN OR WAIVED THE CONDITIONS UNDER WHICH IT FIRST AUTHORIZED THE NEGOTIATIONS AND THE EXECUTION OF THE PROPOSED LEASE, THE LETTER COULD NOT BE REGARDED AS A BINDING COMMITMENT TO LEASE IN THE ABSENCE OF SATISFACTION OF SUCH CONDITIONS. GOVERNMENT OF THE VIRGIN ISLANDS V. GORDON, 244 F.2D 818; GAY STREET CORPORATION OF BALTIMORE, MARYLAND V. UNITED STATES, 130 CT.CL. 341; 18 COMP. GEN. 568.

UNDER THE FOREGOING CIRCUMSTANCES IT MUST BE CONCLUDED THAT, UNLESS THE LAWS OF SOUTHERN RHODESIA APPLICABLE TO FACTUAL SITUATIONS SUCH AS HERE INVOLVED DIFFER FROM THE RULINGS OF OUR COURTS, THERE IS NO LEGAL BASIS FOR PAYMENT OF ANY PART OF THE DAMAGES ALLEGED TO HAVE BEEN INCURRED BY THE CLAIMANTS. PENN FOUNDRY AND MANUFACTURING COMPANY V. UNITED STATES, 110 CT.CL. 374.