American Jewellry Company and Indru Khemlani v Commercial Corporation JA Ltd, Tewani Ltd, Gordon Tewani and Jennifer Messado; Commercial Corporation JA Ltd v Roshan Khemlani, Sham Khemlani and Raj Khemlani; Tewani Ltd v Indru Khemlani, Commercial Corporation, Gordon Tewani amd Jennifer Messado [Consolidated Suits]

• Jurisdiction: Jamaica
• Judge: Beswick J
• Judgment Date: 04 December 2006
• Judgment citation (vLex): [2006] 12 JJC 0401
• Court: Supreme Court (Jamaica)
• Date: 04 December 2006

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

BETWEEN

AMERICAN JEWELLERY COMPANY

1 ^st PLAINTIFF

AND

INDRU KHEMLANI

2 ^ND PLAINTIFF

AND

COMMERCIAL CORPORATION JA. LTD.

1 ^ST DEFENDANT

AND

TEWANI LTD.

2 ^ND DEFENDANT

AND

GORDON TEWANI

3 ^RD DEFENDANT

AND

JENNIFER MESSADO

4 ^TH DEFENDANT

BETWEEN

COMMERCIAL CORPORATION JA. LTD

PLAINTIFF

AND

ROSHAN KHEMLANI

SHAM KHEMLANI

RAJ KHEMLANI

DEFENDANTS

BETWEEN

TEWANI LTD

PLAINTIFF

AND

INDRU KHEMLANI

DEFENDANT

AND

COMMERCIAL CORP.

1 ^st ANCILLARY DEFENDANT TO THE COUNTERCLAIM

AND

GORDON TEWANI

2 ^nd ANCILLARY DEFENDANT TO THE COUNTERCLAIM

AND

JENNIFER MESSADO

3 ^rd ANCILLARY DEFENDANT TO THE COUNTERCLAIM

^st

^{nd rd}

^th

REAL PROPERTY - Sale - Breach of contract

Beswick J

1 TABLE OF CONTENTS

Introduction	4
The claims	5
Earlier suits	8
Suit CLAO18/2001 - The Tropical Plaza Property	9
Payment of the balance of the purchase price	9
Variation in the Sale Agreement	11
Possession	12
Completion	14
The Fraud	24
Knowledge of the fraud is essential	24
The Conspiracy	30
Use and occupation of the Tropical Plaza property	31
Breach of Undertaking	34
Suit C.L 149/2001 The Lease-Tropical Plaza property	37
Suit CLC 255/ 2001 Recovery of Possession of the Tropical Plaza property	38
The King Street property	39
Suit CLT024/2001 - Possession of King Street property	41
Suit CLT151/2001 Rental of the King Street property	42
Rental of Tropical Plaza property	43
Orders	44
CL AO 18/2001	44
CL C149 and 255/2001 (Consolidated)	46
CL T 151 and 024/2001 Consolidated	46
Interest	47
Costs	48

2 Introduction

3 1. American Jewellery Company Limited (American) and Mr. Gordon Tewani (Mr. T), entered into a contract where Mr. T agreed to purchase #3 Tropical Plaza, located at #12 ½ and 14 Constant Spring Road, St. Andrew. The registered owner of the property was American of which Mr. Indru Khemlani (Mr. Khem) is the Managing Director and majority shareholder.

4 2. Mr. T paid a portion of the purchase price. By this sale agreement which was dated August 16, 1999, American had also agreed to lease, "the one half section of the said premises being the shop now known as American Jewellery Company Limited" for three years from the date of completion. That was the same shop that American was occupying at the time of entering into the Sale Agreement. The precise terms of this lease were not agreed. Negotiations and communication continued between the parties and their lawyers and Mr. T paid further amounts towards the sale price.

5 3. Disagreements arose on some important issues including the details of the lease, and the nature of the undertaking to pay the balance of the purchase price.

6 4. Correspondence continued between the lawyers, Mr. Clough on behalf of American and Mr. Khem, and Ms. Messado on behalf of Mr. T. The completion date passed without the sale being completed, but Mr. T paid more of the balance of the purchase price. Mr. Clough did not produce the documents to register the name of a new owner on the Title. Later, Ms. Messado caused one of Mr. T's companies, Commercial Corporation Ja. Ltd. (Commercial), to be registered as owner of the Tropical Plaza property. American remained in possession.

7 5. Eventually, Roshan. Sham and Raj Khemlani signed a lease agreement as lessors, with Commercial for Shop #3A, effective January 1, 2001. The premises were described as "one-half of....#12 ½ and 14 Constant Spring ...known as Lot #3A...part of Lot #3 of #12 ½ and 14 Constant Spring Road". They paid rental on three occasions only. American continues to occupy that shop.

8 6. Meanwhile Mr. Khem himself, not American, owned property at 70A King Street, Kingston. He owed monies on its mortgage to the Bank of Nova Scotia. Whilst negotiations continued about the Tropical Plaza property, the Bank of Nova Scotia put the King Street property up for sale by public auction, to recover the monies due on it.

9 7. The local Gleaner newspaper carried notices of the auction and Mr. T attended the public auction of the King Street property accompanied by Ms. Messado, his lawyer.

10 8. Persons placed bids on the property. Mr. T's bid was the highest made. He paid the amount of the bid and subsequently received the registered Duplicate Certificate of Title for the King Street premises in the name of his nominee, Tewani Limited (T Ltd).

11 9. Mr. Khem has remained in possession of the King Street property although he was requested to vacate. Several suits were filed by the parties to resolve the issues that arose, and five were consolidated to be determined in these instant proceedings.

12 The claims

13 10. American and Mr. Khem filed Suit CL A018/2001 seeking to recover damages from Commercial and Mr. T for breach of the contract for the sale of the Tropical Plaza property alleging that the full purchase price was not paid and that Commercial's name was wrongfully registered as owner.

14 11. American therefore also claims damages against Ms. Messado for breach of her professional undertaking not to deal with the Tropical Plaza premises until the purchase price was paid.

15 12. American also seeks to recover the monies described as the balance of the purchase price for the premises. The amounts claimed differ. The Further Amended Writ of Summons and Endorsement claims the amount to be $1,709,738.50. The Further Amended Statement of Claim claims the amount to be $1 , 657,488.91 and in the written submissions the amount outstanding is said to be $1,656,825.57

16 13. American also asks for a declaration that the lease of the premises would commence when that sum was paid.

17 14. American and Mr. Khem, in this suit, also claim damages from Commercial, T Ltd., and Mr. T for conspiracy to injure and/or to defraud and/or damages for fraud.

18 15. Mr. Khem, as against T Ltd., asks for an Order that the transfer of the King Street property be set aside and that an injunction be granted restraining it from dealing in or parting with that property.

19 16. Commercial and Mr. T in their defence say that all monies due to American were paid and American remained in occupation of a portion of the premises and were thus liable to pay for that occupation.

20 17. Mr. T and Commercial contend that they were entitled to set off certain amounts from the purchase money for American's use and occupation of part of the Tropical Plaza property, i.e. the American shop. Their counterclaim therefore is for American's use and occupation of one half of the Tropical Plaza property (the American shop) with General Consumption Tax (GCT) between February 8 and December 31, 2000. The Special Damages are particularized as being use and occupation of shop 3 Tropical Plaza from March 1, 2001 to present and continuing with GCT. They deny any conspiracy to defraud, or any fraud and or any wrongdoing and plead that the purchase of the King Street property was a separate transaction from the purchase of the Tropical Plaza property.

21 18. In suit CL C149/2001 Commercial claims rental monies from Roshan, Sham and Raj Khemlani for Shop 3 Tropical Plaza and in CL C255/2001 claims for possession of that shop. The defence to both claims is that the property still belongs to American and therefore the lease has not commenced.

22 19. In Suit CL T024/2001, T Ltd., claims possession of 70A King Street. Mr. Khem denies that T Ltd., is entitled to that relief because, he alleges, the transfer to T Ltd., was wrong and was part of a conspiracy to defraud and a fraud. He counterclaims for damages for fraud and/or conspiracy to injure and/or defraud against T Ltd., and the ancillary defendants, Commercial, Mr. T and Ms. Messado whom he had joined to the suit and asks for the transfer to be set aside and an injunction be granted restraining T Ltd from dealing in or parting with the premises. T Ltd., and the ancillary defendants deny any wrongdoing.

23 20. In Suit CL T151/2001, T Ltd., claims from Mr. Khem mesne profits for occupying the King Street property from January 5, 2001 to the present and continuing.

24 21. Mr. Khem's defence is that the transfer to T Ltd., was fraudulent and he denies that his continued possession of the premises is wrongful, so that T Ltd., is not entitled to the monies claimed.

25 22. Mr. Khem counterclaims in this suit against T Ltd., and against Commercial, Mr. T and Ms. Messado whom he had also joined as ancillary defendants to the counterclaim for damages for fraud and against T Ltd., for an order that the transfer of January 5, 2001 of this King Street property to T Ltd. be set aside and that T Ltd. be restrained from dealing in or parting with the premises.

26 23. Mr. Khem contends that there was a conspiracy involving Mr. T, Mr. T's companies and Ms. Messado, T's lawyer, focussed on defrauding Mr. Khem by deliberately delaying payment to him of the balance of the purchase price of Tropical Plaza. Mr. T, so it was alleged, knew that without that money, Mr. Khem would be unable to pay his debts on the King Street property, and an auction of the premises would be inevitable. Mr. Khem asserts that in furtherance of the conspiracy, Mr. T then stood ready to purchase that King Street property and did in fact make that purchase at an undervalue, thereby fraudulently depriving Mr. Khem of the property.

27 Earlier suits

28 24. In November 2001, Brown J (Ag) had granted an Order for Summary Judgment for recovery of possession of 70A King Street and refused an injunction seeking to restrain Mr. T from dealing in or parting with the premises.

29 25. American and Mr. Khem appealed that judgment...