Alexander House Ltd v Reliance Group of Companies
| Jurisdiction | Jamaica |
| Judge | David Batts |
| Judgment Date | 02 August 2016 |
| Court | Supreme Court (Jamaica) |
| Docket Number | CLAIM NO. 2016CD00166 |
| Date | 02 August 2016 |
[2016] JMCC Comm 22
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE COMMERCIAL DIVISION
Cor: Batts J
CLAIM NO. 2016CD00166
Mr Abe Dabdoub and Ms Karen Dabdoub instructed by Dabdoub & Dabdoub for the Claimant.
Mr Patrick Foster QC instructed by Mr Donovan Jackson of Nunes Scholefield Deleon & Co for the Defendant.
Interlocutory Injunction — Mortgage — Power of sale — Whether contract illegal — Whether condition for payment into court ought to be imposed.
On the 20 th July 2016 having heard submissions I adjourned to the 25 th July 2016 in order to consider my decision. On the 25 th I brought to the attention of counsel the very recently decided case of Patel v Mirza [2016] UK SC42 (unreported judgment delivered on the 20 th July 2016). I adjourned for counsel to make submissions on that case. On the 29 th July 2016 further submissions were heard. I again adjourned to consider my decision which I gave on the 2 nd August 2016. I promised then to put my reasons in writing at a later date. This judgment fulfills that promise.
This is the inter partes hearing of a ‘Without Notice of application for Court Orders’ filed on the 16 th June 2016. The Claimant by that application seeks to restrain the Defendant from exercising powers of sale contained in a mortgage. The Defendant is resisting the application.
At the ex parte hearing on the 16 th June 2016 an injunctive order was made conditional on a payment being made into court. That condition was not met. There is therefore no interim order in place. The Claimant, having changed attorneys and amended its claim now urges the court to restrain the mortgagee's exercise of its powers of sale and to do so unconditionally.
Each party filed affidavits and written submissions. The latter were supplemented by oral arguments which extended in total for the better part of two days. I am very grateful to both counsel for their assistance and the manner of the presentations. I will not, in the interest of time, restate the details of the respective arguments or the respective factual allegations. I intend to advert only to so much of each as I consider necessary to explain my decision.
It is common ground that at this interlocutory stage I am not required to make any factual findings. The correct approach to applications for an Interlocutory Injunction is well known and well established, see American Cyanamid v Ethicon [1975] 1 All ER 504 as restated and applied in National Commercial Bank v Olint [2009] UKPC 16. The parties are ad idem on the applicable approach.
The major point of departure in this matter is whether or not, as a condition of the grant of this injunction, the money allegedly due ought to be paid into court. Mr. Foster QC submitted that there really was no arguable case and as such no injunction is to be granted. However, if the court found that there was an arguable case and that the justice of the case favoured the grant of an injunction, then the principle established in SSI(Cayman) Limited v International Marbella Club SA SCCA No. 57/1986 ( Judgment delivered 6th February 1987 ) ‘Marbella’, ought to be applied. That is that, as a condition of the grant of an injunction, the sum due should be paid into court. To do otherwise, he submitted, would render nugatory the value of a mortgage and the power of sale contained therein. Mr. Dabdoub argues that not only is his client's case unanswerable but it falls within established exceptions to the Marbella rule.
The material factual matrix in which these issues fall to be determined can be shortly stated.
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a) The Claimant borrowed from the Defendant, and secured by way of mortgage, United States currency.
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b) The Claimant failed to repay his loan as agreed or at all.
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c) The Claimant was contacted in relation to its obligations but reneged on various promises to repay.
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d) The Claimant was given notice of the Defendant's intention to exercise its powers of sale. The Claimant contends this notice was not ‘formal’, but admits being made aware of that intention. [The full details of the correspondence leading up to the fixing of a date for the auction are contained in paragraphs 10 to 21 of the affidavit of Mr. Donovan Jackson filed on the 22 nd June, 2016, and are not disputed].
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e) The Defendant has on prior occasions given loans in United States dollars to other persons.
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f) The Defendant is not a licensed dealer in foreign currency.
Mr. Dabdoub's case is that the Defendant was acting in breach of Section 22A (2) of the Bank of Jamaica Act when it granted the loan to the Claimant. He argues that the loan is illegal and the mortgage unenforceable and that therefore, the matter falls within a clear exception to Marbella and hence no condition for payment ought to be imposed.
Mr. Foster Queen's Counsel, asserts that the evidence raises no arguable case of illegality and in any event does not fall within the clearly established exceptions. In any event, submitted Mr. Foster, the Claimant remains liable to give restitution of the funds he received and should therefore be ordered to bring the money to account.
Having perused the evidence and the law on the matter I am satisfied that the Claimant has a case with a reasonable or real prospect of success. Section 22A of the Bank of Jamaica Act provides:
‘(1) Except as provided in subsections (2) and (3) any person may buy, sell, borrow or lend foreign currency or foreign currency instruments
(2) No person shall carry on the business of buying, selling, borrowing or lending foreign currency or foreign currency instruments in Jamaica unless he is an authorised dealer.
(3) It shall be unlawful for any person to buy, sell, borrow or lend foreign currency or foreign currency instruments in a transaction involving the payment of Jamaican currency unless the payment is made to or as the case may be by an authorised dealer. [Emphasis added]’
‘Authorised dealer’ is defined in Section 2 of the Act. It is common ground that the Defendant is not an authorised dealer. It is common ground also that the Defendant did lend money in foreign currency. The area of factual dispute for determination at trial is whether the Claimant was in the business of lending foreign currency.
I am not required to resolve, at this interlocutory stage, that or any factual dispute. Nothing I say is to be taken to imply a point of view one way or the other. I am however required to assess the relative strength of the case. In this regard the Claimant lead evidence, which is admitted, that the Defendant has also granted foreign currency loans to: C. Clarke, Foreign Options Ltd., J. Reitti, (Fonseca) Pauline Stewart, Ken Sales & Marketing Ltd. and to F. Rowe.
The Defendant's response is to assert that its business is buying, holding, renting, and selling real estate. The Defendant denies that it carried on the business of lending foreign currency. The Defendant says in the affidavit filed by Mr. Gordon Tewani, on its behalf, that ‘I have infrequently assisted friends and associates with loans over the years.’ He describes these as isolated and infrequent transactions. He explains some of the alleged loans as follows:
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a) C. Clarke is a good and personal friend who needed money urgently in 2015.
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b) Foreign Options Ltd. was connected to one of his attorneys Mrs. Jennifer Messado and to whom he loaned moneys on her personal request.
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c) J. Reitti was not a money lending transaction but an ‘advance’ made in 2014 on the request of Mrs. Messado.
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d) Fonseca and Pauline Stewart were personal friends who needed money following a robbery at their travel agency in 1996.
The Defendant did not, on affidavit, address the alleged loan to Ken Sales or seek to explain it. That loan was evidenced by an unreported judgment of the Court of Appeal: Reliance Group of Companies v Ken Sales & Marketing and Clifton Graham [2011] JMCA Civ. 12. In that case an attempt was also made to prevent the exercise of powers of sale in a mortgage. The allegation of illegality by way of breach of the Bank of Jamaica Act (S. 22A) was similarly made. In the leading judgment of the Court Hibbert JA (Ag) said,
‘In this case there is evidence that two loans were made to Ken Sales one in October 1999 and the other in December 1999. There is no evidence of any other loans or even offer of loans to anyone else. It does not require a court to resolve conflicts of evidence as to facts or to decide difficult questions of law to conclude that on the evidence available to the court it could not be held that Reliance was carrying on the business of lending foreign currency. This could not, therefore, be deemed to be a serious question to be tried in determining whether or not a permanent injunction should be granted.’
At this time and on the evidence before me there is not evidence of two but rather evidence of six loans in foreign currency. Furthermore, in relation to the Stuart loan, the Claimant filed an affidavit of Fonseca Jack Stuart on the 20 th July 2016. In that affidavit Mr. Stuart denied he was a friend of Mr. Gordon Tewani. He explained the circumstances under which he came to borrow the money and said,
“That at all material times we were of the view that Mr. Tewani was in fact involved in the lending of foreign currency…’
I find that on the evidence before me there is a serious question to be tried as to whether or not the Defendant was in the business of lending foreign currency and therefore in breach of Section 22A of the Bank of Jamaica Act.
Mr. Foster's further submission is that even if that is so the consequence is not an unenforceable loan. There is he said, nothing in the Act making...
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Neville Peralto v Cok Sodality Co-Operative Credit Union Ltd
... ... injunction may be granted are those outlined by the House of Lords in American Cyanamid Co. v Ethicon [1975] 1 All ... has been reaffirmed recently in the case of Alexander House Limited v Reliance Group of Companies [2016] JMCC ... ...