American Jewellry Company Ltd, Indru Khemlani, Roshan Khemlani, Sham Khemlani and Raj Khemlani v Commercial Corporation Jamaica Ltd, Tewani Ltd, Gordon Tewani and Jennifer Messado

• Jurisdiction: Jamaica
• Judge: COOKE, J.A. , HARRISON, J.A. , DUKHARAN, J.A.
• Judgment Date: 01 October 2010
• Judgment citation (vLex): [2010] 10 JJC 0101
• Court: Court of Appeal (Jamaica)
• Date: 01 October 2010

[2010] JMCA Civ 36

IN THE COURT OF APPEAL

BEFORE:

THE HON. MR JUSTICE COOKE, J.A THE HON. MR JUSTICE HARRISON, J.A THE HON. MR JUSTICE DUKHARAN, J.A

BETWEEN

AMERICAN JEWELLERY COMPANY LIMITED

1 ^st APPELLANT

AND

INDRU KHEMLANI

2 ^ND APPELLANT

AND

ROSHAN KHEMLANI

3 ^RD APPELLANT

AND

SHAM KHEMLANI

4 ^TH APPELLANT

AND

RAJ KHEMLANI

5 ^TH APPELLANT

AND

COMMERCIAL CORPORATION JAMAICA LIMITED

1 ^ST RESPONDENT

AND

TEWANI LIMITED

2 ^ND RESPONDENT

AND

GORDON TEWANI

3 ^RD RESPONDENT

AND

JENNIFER MESSADO

4 ^TH RESPONDENT

Miss Hilary Phillips, Q.C., Mrs. Denise Kitson and Miss Lauren Sadler instructed by Grant, Stewart, Phillips and Company for the appellants

Mrs. Georgia Gibson-Henlin instructed by Henlin Gibson Henlin for the 1 ^st respondent

Miss Carol Davis for the 2 ^nd and 3 ^rd respondents.

Garth McBean instructed by Garth McBean and Company for the 4th respondent

DAMAGES - Breach of contract - Breach of professional undertaking - Fraud - Injunction - Set-off - Recovery of possession

COOKE, J.A.

ORDER

• 1. The appeal is allowed in part.

• 2. The orders of the learned judge are varied as follows:

  • (i) There shall be no award to the lst appellant for the sum of $575,000.00.

  • (ii) The 4th respondent shall pay to the lst appellant as damages for breach of undertaking, interest on the sum of $388,402.18 from 23 June to 29 August 2000, on the sum of $2,000,000.00 from 23 June 2000 to 18 July 2000 and on the sum of $575,000.00 from 25 June 2000 to the date of payment. Interest is to be paid at a commercial rate to be determined either by agreement within 30 days of the date of delivery of this judgment or by the Registrar of the Supreme Court/Court of Appeal.

  • (iii) The 3 ^rd respondent is not entitled to any sums for interest on sums paid in excess of the agreed initial deposit of $4,000,000.00.

  • (iv) Each party is entitled to 50% of the costs of the appeal.

• D. In respect of the appeal concerning Suits CL CI49/2001 and CL C255/2001:

  Appeal dismissed with costs to the respondents to be taxed if not agreed.

• E. In respect of the appeal concerning Suits CL TO24/200I and CL TI51/2001 :

  Appeal dismissed with costs to the respondents to be taxed if not agreed.

COOKE, J.A.

1 This appeal challenges the correctness of the decisions made by Beswick J in five consolidated claims. These claims and the defences thereto were usefully summarized by the learned trial judge and I accept that effort as adequate for the purposes of the debate which was conducted before us. I now reproduce this summary, but before I do this, I must indicate that "Mr Khem" is the 2 ^nd appellant, "Mr T" is 3 ^rd respondent; "American" is the 1 ^st appellant "T Ltd" is the 2 ^nd respondent and "Commercial" is the 1 ^st respondent.

2 The summary is as follows: -

"The claims

"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.

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.

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.

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

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.

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.

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.

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 wrong-doing and plead that the purchase of the King Street property was a separate transaction from the purchase of the Tropical Plaza property.

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.

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.

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.

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.

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.

23. Mr. Khem contends that there was a conspiracy involving Mr. T, Mr T's companies and Ms Messado, T's lawyer, focused 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."

3 The central issue in this contest is whether or not parties who had conduct of the purchaser's side of the bargain in respect of the contract for the sale of the Tropical Plaza property carried out their obligation in a manner which was calculated to injure the 2 ^nd appellant. The contention of the 1 ^st appellant was that there was a conspiracy whereby, by the use of fraudulent delaying tactics, the purchase monies in respect of the contract of sale were deliberately withheld so that the 2 ^nd appellant was without funds to discharge a mortgage on his property at 70A King Street in the parish of Kingston. This inability to discharge this mortgage resulted in the mortgagee exercising its power of sale. This sale was through the medium of a public auction. The 3 ^rd respondent at the auction bought the property for "an undervalue", it is said. The injury which the 2 ^nd appellant suffered was the loss of his property at 70A King Street. The alleged conspiracy had achieved its objective as the 2 ^nd respondent acquired 70A King Street by fraudulent means.

4 Counsel for the appellants, Ms Phillips Q.C., subjected the judgment of the learned trial judge to microscopic scrutiny and in the written submissions listed some twenty six instances where there were errors in law and in fact. These instances include criticism of the learned trial judge's treatment of a lease agreement which I do not regard as being relevant to what I regard as the central issue and will be dealt with subsequently in this opinion. As regards the learned trial judge's findings of fact, I will be cognizant of the guidance given by their Lordships' Board in a case from our jurisdiction — Industrial Chemical Co (Jamaica) Ltd v Ellis (1982) 35 WIR 303 where at page 305 e ૻ f, it was said :

"The principles governing the approach of an appellate court to the review of the decision of the judge of trial on disputed issues of fact are familiar, but ii is worth stressing yet again what has been said both by the House of the Lords and by this Board. The matter is summed up in the well-known passage from the speech of Lord Thankerton in Waff (or Thomas) v Thomas [1947] AC 484 at pages 487 and 488:

"(1) Where a question of fact has been tried by a judge without a jury, and there is no question of misdirection of himself by the...