Auburn Court Ltd v Delbert Perrier and Jamaica Redevelopment Foundation Inc.
|31 March 2010
|JM 2010 CA 46
|Judgment citation (vLex)
| 3 JJC 3101
|Court of Appeal (Jamaica)
|31 March 2010
INJUNCTIONS - Interlocutory injunction - Powers of sale under mortgage - Serious question to be tried - Whether damages were an adequate remedy
On 5 February 2010, Campbell J refused an application by the applicants (who are the claimants in the court below) for an interlocutory injunction to restrain the respondent ("JRF") from exercising its powers of sale under mortgages registered in JRF's favour on two properties owned by the first named applicant ("Auburn Court") and another owned by the second named applicant ("Mr Perrier"), until trial of the action in this matter. The learned judge considered that, on the basis of the material before him, the application did not disclose that there was a serious question to be tried and that, in any event, damages would be an adequate remedy should the applicants ultimately succeed at trial. Although there are no written reasons from the judge himself, I did have the benefit of a note of his oral judgment taken by Mrs Robinson, but not yet approved by the judge.
In the Supreme Court proceedings, Auburn Court's claim against JRF is for declarations with regard to the true meaning and effect of an Agreement to Restructure Existing Debt dated 30 August 2004 between Auburn Court and JRF ("the agreement") and for injunctions in the following terms:
"4. An injunction restraining the Defendant from advertising, selling or otherwise dealing with the 1 st Claimant's property registered at Volume 965 Folio 108 and known as 3 Padua Avenue, Patrick City, Kingston 20 in the parish of St. Andrew, pursuant to mortgage no. 695288 first registered on the said title on 10 th December, 1991, or otherwise.
5. An injunction restraining the Defendant from advertising, selling or otherwise dealing with the 1 st Claimant's property registered at Volume 955 Folio 565 and Volume 955 Folio 566 in the parish of St. Andrew pursuant to mortgage no. 691296 or otherwise."
By notice of appeal filed on 18 February 2010, the applicants appealed to this court against Campbell J's refusal to grant the injunctions until trial, on the following grounds:
"(i)The Learned Judge in Chambers erred in refusing to grant the interlocutory injunctions sought.
(ii) That the Learned Judge in Chambers erred in concluding that damages were an adequate remedy.
(iii) The Learned Judge erred in finding that there was no serious question to be tried.
(iv) The Learned Judge erred in failing to consider that the balance of convenience lay in granting the injunction sought.
(v) The Learned Trial Judge erred in failing to take into consideration that although the injunction sought was for purpose of restraining the exercise of powers of sale by a mortgagee, the Appellant was questioning the validity of the mortgage and/or whether the powers of sale in the mortgage were exercisable."
By an amended notice of appeal filed on 15 March 2010, the applicants added an additional ground, as follows:
"(vi) The Learned Judge in Chambers erred in that he failed to take into consideration that there was an issue as to whether the loan agreement was not independent of the mortgage, and that Item 8 (e) of the Schedule to Agreement Existing Debt was a collateral advantage to the Mortgagee and/or was in the nature of a clog on the equity of redemption and/or was oppressive and/or was unfair and unconscionable. In the circumstances the said item 8(e) was void and/or unenforceable, and an injunction ought to have been granted to determine the issue as to whether the Defendant was to release the title registered at Volume 965 Folio 108, and the Appellant given a reasonable opportunity to redeem the mortgage prior to the exercise of any power of sale by the mortgagee."
Before me is an application for injunctions pending the hearing of the appeal in identical terms to those which had been refused by the judge below. The application is supported by an affidavit sworn to by Mr Perrier on 15 March 2010 and opposed by an affidavit sworn to by Ms Merlene Patterson on 22 March 2010.
The facts in outline
The facts leading up to the execution of the agreement in 2004 are largely undisputed. Auburn Court is the registered proprietor of property registered at Volume 955 Folio 565 and Volume 955 Folio 566 of the Register Book of Titles and Mr Perrier is the registered proprietor of property registered at Volume 965 Folio 108 of the Register Book of Titles. The matter has its origins in a debt owed by Auburn Court to National Commercial Bank Jamaica Ltd ("the original debt"), which was guaranteed by Mr Perrier and two others. By Deed of Assignment dated 30 January 2002, the debt was assigned to JRF and a number of mortgages in connection with the debt were transferred to JRF, which remains the registered proprietors of those mortgages.
By the year 2004, the original debt stood at US$3,999,244 and the agreement was entered into between JRF (as assignee of the debt), Auburn Court (as borrower), Mr Perrier and Ms Myrna Euleston Kedroe (as guarantors). The agreement itself recited that the security for the original debt had become enforceable, the borrower having defaulted on the terms of the loan, and that the original debt was "now due and payable" (recital (5)). Under the terms of the agreement, the original debt was restructured conditionally to a principal amount of US$600,000, subject to "(i) strict compliance with all the terms of this Agreement; and (ii) the Borrower and/or Guarantor making payments in the amounts and the manner set out in Item 8 of the Schedule hereto" (cl.3(1)).
Cl. 5 of the agreement stipulated for payment of a 'late charge' upon Auburn Court making any payment due pursuant to Item 8 of the Schedule later than five days after its due date (to a maximum of 5% of the amount of the late payment) and cl. 6(1) set out the parties' agreement that the existing security should remain in force to secure the original and the restructured debt. In cl. 7 Auburn Court confirmed that JRF did not by virtue of the agreement "release, forgive, discharge, impair, waive or relinquish any rights, titles, interest, and liens, security interests, collateral, parties, remedies or power with respect to the Security but rather JRF is expressly retaining and reserving the same to the fullest extent". Cl. 17 provided that no part of the agreement could be waived, modified or amended except by an instrument in writing signed by the parties.
Much turns for present purposes on the provisions of item 8 of the Schedule to the agreement, which I therefore set out in full:
"Item 8: Payment Terms for Restructured Debt
(a) $20,000.00 upon execution and delivery of this Agreement to be made no later than April 30 th 2004.
(b) A further payment of $100,000.00 will be made no Later than August 31, 2004, at which time the balance on the account will be amortized in accordance with the terms and conditions listed below.
(c) The balance S480,000.00 will be amortized over a 20 year period with a 5 year balloon and repaid by 59 equal consecutive monthly payments of $5,285.51 each inclusive of interest at the rate of 12% per annum calculated on the reducing balance of the Restructured Debt. This first payment shall be become due on the 25 th day of September and the 25 th day of each and every month thereafter.
(d) A final payment of all unpaid principal, accrued interest and fees shall be paid no later than the 25 th day of August 2009.
(e) At anytime upon receipt of a total principal payment of S250,000.00 together with interest due and owing at the date of payment, to be applied to the restructured amount, JRF will release their lien over property located at Lot 609 on the Plan of Patrick City registered at Volume 965 Folio 108. Or alternatively, release the said Duplicate Certificate of Title for splintering upon receipt of an acceptable Letter of Undertaking."
JRF contends that the applicants are in default of the terms of the agreement (in particular item 8) and that by 25 August 2009 the total amount due to it under the agreement was US$480,903.95 in principal and interest payments, together with US$3,397.72 for General Consumption Tax on late charges. Further, that as a consequence of this default the original debt has been reinstated in accordance with the terms of the agreement. As a result, on 7 December 2009, JRF issued statutory notices of its intention to exercise its powers of sale under the mortgages at the end of one month from the date of the notices, unless suitable arrangements were made to cure the default within that period. JRF's position is that, as at 19 January 2010, the applicants are indebted to JRF in the sum of J$279,990,165.71 and that the debt continues to accrue interest at the rate of 30% per annum or J$36,627 per day. It is the issue of the statutory notices that has given rise to the litigation in this matter, the fixed date claim form having been filed on 8 January 2010.
Auburn Court, on the other hand, points out that it made the lump sum payments (US$20,000 and US$100,000) required by the...
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