S&T Distributors Ltd.and S&T Ltd v CIBC Jamaica Ltd and Royal & Sun Alliance

• Jurisdiction: Jamaica
• Judge: HARRISON, P. , HARRIS, J.A: , SMITH, J.A:
• Judgment Date: 31 July 2007
• Neutral Citation: JM 2007 CA 43
• Judgment citation (vLex): [2007] 7 JJC 3104
• Court: Court of Appeal (Jamaica)
• Date: 31 July 2007

IN THE COURT OF APPEAL

BEFORE:

THE HON. MR. JUSTICE HARRISON, P THE HON. MR. JUSTICE SMITH, J.A THE HON. MRS. JUSTICE HARRIS, J.A

BETWEEN:

S & T DISTRIBUTORS LIMITED

1 ^ST APPELLANT

AND

S & T LIMITED

2 ^ND APPELLANT

AND

CIBC JAMAICA LIMITED

1 ^ST RESPONDENT

AND

ROYAL & SUN ALLIANCE

2 ^ND RESPONDENT

Miss Carol Davis for appellants

W. John Vassell, Q.C. & Miss Shena Stubbs instructed by DunnCox for 1 ^st respondent

Conrad George instructed by Hart, Muirhead Fatta for 2 ^nd respondent

CIVIL PROCEDURE - Claim - Breach of contract and negligence - Striking out - Appeal

HARRISON, P.

1 These appellants appeal against the judgment of Sykes, J on 19 ^th November 2004 in which it was ordered in respect of the claimant's notice of application for court orders dated 16 ^th April 2004:

• "i. That the Order of this Honourable Court made on 11 ^th July, 2002 in which the Claim against the 2 ^nd Defendant herein was struck out, be set aside.

• ii. Claim struck out as it discloses no reasonable cause of action.

• iii. Cost [sic] to Royal and Sun Alliance to be agreed or taxed.

...

With respect to the 1 ^st Defendant's Notice of Application for Court Orders filed on 13 ^th August, 2004, IT IS HEREBY ORDERED AS FOLLOWS:

• "i S & T Distributors' Claim in contract against CIBC Jamaica Limited struck out...

• v. S & T Limited's claim in contract against CIBC Jamaica Limited struck out on the basis that it discloses no reasonable cause of action.

• vi. CIBC granted permission to amend Defence to the rest of the Claim.

• vii. Costs to CIBC to be agreed or taxed.

• vii. Leave granted to CIBC to amend defence.

..."

2 Mr. Vassell, Q.C., for the first respondent, raised a preliminary issue. He submitted, that this Court had no jurisdiction to hear this appeal because it was a procedural appeal pursuant to rule 1.1 (8) of the Court of Appeal Rules 2002 ("the Rules") and no notice of appeal was filed within the requisite seven (7) days of the judgment.

3 Mr. George for the second respondent adopted the arguments of learned Queen's Counsel.

4 Miss Davis, for the appellants, argued that the court below did decide the substantive issues in the case by striking out the entire claim in negligence and aspects of the claim for the breach of contract alleged. She submitted that it was not a procedural appeal, that the record and submissions had been filed and case management order had been made. However, if this Court finds that it is a procedural appeal, she said, she was seeking, pursuant to rule 1.11(2), an order to extend the time to file the appeal and that this Court hears the appeal.

5 This Court considered this point in limine. We found that, pursuant to rule 1.1(8) of the Rules, this matter was a procedural appeal in that the striking out, "... decision of the court below ...[did] not directly decide the substantive issues... " in the claim, in the court below. All parties accepted that leave to appeal was granted in the Court below, on 19 ^th November 2004 by Sykes, J., pursuant to section 11 (1 )(f) of the Judicature (Appellate Jurisdiction) Act.

6 Therefore, the notice of appeal herein should have been filed and served within seven (7) days of the decision of Sykes, J. Notice was filed on 6 ^th December 2004, outside of the statutory period.

7 The notice having been filed out of time, there is merit to the point in limine. The strict rules were not followed.

8 We were of the view however, because the Registrar, treating the matter as an appeal, referred it to a single judge who himself treated it as an appeal and made orders, we will treat the matter as if it had been properly referred to this Court by the single judge pursuant to rule 2.4(5). The said rule reads:

"The Judge may, however, direct that the parties be entitled to make oral submissions and may direct that the appeal be heard by the Court."

9 We therefore extended the time for filing, treated the matter as if it had been filed within time, and decided that this Court would hear the appeal. We made no order as to costs.

10 The relevant facts are that the first appellant S &T Distributors Ltd ("STD") and the second appellant S &T Ltd ("S &T") were both registered companies conducting the business of manufacturing at premises 56 Brentford Road Kingston 5 owned by and registered in the name of STD.

11 In about 1982 both appellants STD and S &T, by agreement, obtained overdraft loan facilities from the first respondent, CIBC Jamaica Limited ("CIBC"). As a condition of such facilities STD used the said premises and an apartment of Turtle Towers, Ocho Rios as security and placed CIBC as mortgagee thereon.

12 In addition, the Brentford Road premises was insured against certain risks, including fire, with Royal & Sun Alliance ("Royal"), as further security. This policy of insurance was assigned to CIBC.

13 In July 1993, a fire destroyed the factory premises. Royal refused to pay on the contract of insurance, contending that arson and fraud were committed. STD and S &T sued Royal in 1994 to recover the insurance proceeds (Suit. C.L. 1994/S206). Royal made two interim payments of insurance monies to CIBC in the amounts of $1,390,000.00 and $1,485,000.00 on 10 ^th March 1994 and 20 ^th July 1994, respectively. Subsequently in 1998, the appellants obtained judgment in their favour against Royal.

14 By letter dated 30 ^th May 1994, CIBC, as mortgagee, agreed with STD and S &T that it would go to arbitration with Royal in accordance with a clause in the insurance policy. The appellants contend, in addition, that there were oral agreements made between Anthony Simmons, the managing director of both appellants and Basil Payne, the agent of CIBC, that CIBC would not seek to exercise its power of sale as mortgagee in respect of the said mortgaged properties, until arbitration proceedings were completed and the proceeds of the arbitration proceedings had been recovered. If such proceeds were insufficient to cover the indebtedness then CIBC would proceed. The appellants paid CIBC the sum of $200,000.00 towards the estimated costs of the arbitration proceedings, agreed at $350,000.00.

15 On 30 ^th June 1994 CIBC commenced arbitration proceedings against Royal to determine the sum due under the insurance policy assigned to it. However, Royal filed a suit (CL 1994/W321) and obtained an injunction therein staying the arbitration proceedings. In that suit Royal sought a declaration that the arbitration clause in the insurance policy did not extend to CIBC, but related only to the appellants STD and S &T. CIBC did not challenge the injunction and after the summons for directions Royal did not proceed with the said suit.

16 On 25 ^th January 1996 CIBC as mortgagee published its intention to exercise its powers of sale under the mortgage of STD's premises, at 56 Brentford Road, by public auction on 8 ^th February 1996. Suit C.L. 1994/S206 S &T and STD v. Royal was scheduled to commence on 19 ^th February 1996. The properties were sold in February 1996.

17 On 1 ^st February 1996 STD filed suit CL 1996/S023 against CIBC seeking a declaration that CIBC was not entitled to exercise its powers of sale as mortgagee and sought an injunction restraining CIBC from doing so. STD claimed that:

• (1) CIBC, in pursuant to the mortgage endorsement clause had a duty to request payment, as soon as possible from the insurers.

• (2) At its request in October 1993 and again in March 1994 CIBC agreed "... to seek repayment of [STD's] said debts from the said Insurer under the said Mortgage Endorsement Clause, rather than proceeding against the plaintiff by suit or under the powers of sale of a mortgagee" and

• (3) that STD paid to CIBC the sum of $200,000.00 as a condition for the costs of the arbitration proceedings in lieu of the exercise of CIBC's power of sale.

18 An interlocutory injunction was granted on 15 ^th April 1996 with a condition attached. STD appealed against the condition. The Court of Appeal dismissed the appeal and set aside the injunction order. On 11 ^th July 2001, on the application of CIBC, this suit was struck out on the ground of a failure to disclose a reasonable cause of action. No appeal was filed in challenge to this striking out.

19 On 3 ^rd November 1999 STD and S &T filed against CIBC and Royal, Suit C.L. 1999/S222, claiming damages, in an amended statement of claim, for negligence and breach of contract against both, and in addition, seeking the taking of an account against CIBC.

20 On 11 ^th July 2002 Suit CL 1999/S222 was struck out.

21 On 19 November 2004 Royal applied for court orders to set aside the striking out of Suit C.L. 1999/S222 on the ground that the relevant application had not been served on the appellants. However, application considered by Sykes, J was struck out on the ground that it disclosed no reasonable cause of action. On an application by CIBC, the claim in contract by STD against CIBC was struck out as an abuse of process and the claim of S &T in contract was also struck out as disclosing no reasonable cause of action.

22 This appeal arose as a consequence. The grounds of appeal were:

• "(i) That the Learned Judge in Chambers erred in striking out the Claimant's Claim against the 2 ^nd Defendant.

• (ii) That the Learned Trial Judge erred in that he failed to appreciate that the Negligence alleged against the 2 ^nd Defendant encompassed allegations a) that the 2 ^nd Defendant failed to pay in a timely manner and further that b) the 2 ^nd Defendant wrongfully prevented the arbitration between itself and the 1 ^st Defendant.

• (iii) The Learned Trial Judge erred in that the issue of whether the 2 ^nd Defendant was negligent was an issue of fact to be determined at trial.

• (iv) That the Learned Judge in Chambers erred in striking out the 1 ^st...