Brown and another v Mandolin Investment Group Llc and Metro Funding Corporation

• Jurisdiction: Jamaica
• Judge: MANGATAL J:
• Judgment Date: 20 September 2011
• Judgment citation (vLex): [2011] 9 JJC 2001
• Date: 20 September 2011
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2010 HCV 02855

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CIVIL DIVISION

CLAIM NO. 2010 HCV 02855

BETWEEN

FARREN LLOYD BROWN

CLAIMANTS

AND

VICTORIA BROWN

AND

MANDOLIN INVESTMENT GROUP LLC

1 ^ST DEFENDANT

AND

METRO FUNDING CORP

2 ^ND DEFENDANT

Mr. Harold Brady and Ms. Indera Persaud instructed by Brady and Co. for the Claimants.

Mr. Mark Jennings and Ms. Marlene Uter instructed by Alton Morgan and Co. for the First Defendant.

Mr. Patrick Foster and Mr. Weadon Daley instructed by Hart Muirhead Fatta for the Second Defendant.

VENDORS' MORTGAGE – PRIORITY OF MORTGAGES – REGISTRATION – EQUITABLE MORTGAGE – MEANING OF ‘ALL MONIES’ CLAUSE IN MORTGAGE – RIGHTS OF FORECLOSURE, POSSESSION, REDEMPTION

MANGATAL J

1 This is an application by way of Fixed Date Claim Form by which a number of different Declarations are sought.

2 The Claimants seek:

An initial payment of One Hundred and Ninety Five Thousand Five Hundred United States Dollars ($ 195,000.00) apportioned as follows:

THE PARTIES

• 1. A Declaration that the Agreement for Sale dated the 26 ^th day of February 2007 for the property registered at Volume 1345 Folio 939 between the Claimants and the Defendant is valid and subsisting.

• 2. A Declaration that the said Agreement provides the following payment terms which are valid and binding on the Defendant.

• (i) The sum of US $ 130,000.00 shall be the deposit.

• (ii) The sum of US $20,000.00 is hereby acknowledged as paid to the Vendor by the Purchaser.

• (iii) The sum of US $ 45,500.00 shall be a further payment on account of the Purchase Price.

• (iv) The sum of US $ 654,500.00 payable on completion less monies payable for outstanding utilities, taxes and balance due to discharge mortgage noted on the Certificate of Title.

• (v) The sum of US $50,000.00 payable on or before three (3) weeks after completion. Balance Purchase Money of Four Hundred Thousand United States Dollars (US $400,000.00) shall be secured by a Vendor's Mortgage in favour of the Vendor payable within three (3) years of the date of the Agreement for Sale with interest at the rate of four percent (4%) per annum. The Vendor's mortgage is subject to the first legal mortgage in favour of Metro Funding Corporation and as such the first legal mortgage has priority in registration and discharge in relation to Vendors' mortgage.

• 3. A Declaration that there is in existence a valid Vendors' mortgage of US $ 400,000.00 which matures and became due and payable on or before the 26 ^th day of February 2010.

• 4. A Declaration that to date the Defendant has made no payments under the mortgage and the full amount of US $400,000.00 with the interest rate of 4% per annum remains unpaid and the mortgage remains undischarged.

• 5. A Declaration that the Claimant is entitled to redeem any prior mortgages and to foreclose on the said property and/or is entitled to possession of same.

3 The Claimants Farren and Victoria Brown ‘the Browns’ were the owners of a hotel known as Paradise View in Negril, Westmoreland ‘Paradise View’ registered at Volume 1345 Folio 939.

4 The First Defendant Mandolin Investment Group LLC ‘Mandolin’ is an overseas company re-registered in Jamaica and trading as ‘The Palms - Beachside Resort’.

5 The Second Defendant Metro Funding Corporation ‘MFC’ is a corporation incorporated under the laws of the State of New Jersey, in the United States of America and carries on the business of lending.

6 The grounds upon which the Browns seek these declarations are stated to be as follows:

FACTUAL BACKGROUND

• 1. The Browns were the vendors and registered proprietors of the property known as Paradise View, Negril, in the Parish of Westmoreland which operated as a Hotel/Resort and registered at Volume 1345 Folio 939 pursuant to an Agreement for Sale dated the 26 ^th day of February 2007 for a purchase price of United States One Million, Three Hundred Thousand (US $1,300,000.00).

• 2. It was agreed and understood that Mandolin would finance the purchase price by obtaining a loan of United States Nine Hundred Thousand Dollars (US $900,000.00) from a lending institution, MFC, and the Claimants would grant to Mandolin a Vendor's mortgage in the amount of United States Four Hundred Thousand Dollars (US $400,000.00).

• 3. Pursuant to the terms of the Agreement for Sale, the Browns granted to Mandolin a Vendor's mortgage in the amount of United States Four Hundred Thousand Dollars (US $400,000.00) payable on or before February 26, 2010.

• 4. To date the Browns have received United States Twenty Thousand ($20,000.00) from Mandolin, and the sum of United States Dollars (US $175,000.00) from MFC making a total amount of United States One Hundred and Ninety Five Dollars ($195,000.00) and the Browns acknowledge that the sum of United States Two Hundred and Ninety Five Thousand One Hundred and Fifty Three Dollars and Fourteen Cents (US $295,153.14) being the outstanding mortgage which they had on the property was paid out to Bank of Nova Scotia to discharge their mortgage and release the title.

• 5. Notwithstanding that, the property was transferred to Mandolin, and possession was granted sometime in 2007, to facilitate refurbishment of the hotel. MFC has registered its mortgage on the property and it has refused to pay any further amount from the mortgage loan proceeds on the grounds of a boundary discrepancy.

• 6. To date, notwithstanding demands for payment of the balance of the purchase price, MFC has failed to liquidate its indebtedness under the Vendor's mortgage to the Browns.

• 7. There is evidence that indicates that Mandolin is in receivership in the State of Maryland in the United States of America and is therefore unable to pay its debts.

• 8. That the proceeds of the mortgage loan from MFC are being unlawfully withheld, aided and abetted by Mandolin.

• 9. Mandolin is in receivership and is unable to complete the sale by securing the mortgage proceeds from the lending institution and to liquidate its indebtedness under the Vendor's mortgage.

• 10. In the premises the Browns are entitled to redeem the mortgage from MFC and foreclose on the Vendor's mortgage.

7 On the 26 ^th of February 2007 the Browns and Mandolin entered into an Agreement for Sale of Paradise View for United States One Million Three Hundred Thousand Dollars (US $1,300,000.00).

8 Amongst other terms, the Agreement provided for the following:

HOW PAYABLE

An initial payment of One Hundred and Ninety Five Thousand United States Dollars (US $195,500.00) apportioned as follows:

COMPLETION.

On or before February 28, 2007 on the Transfer of Certificate of Title registered at Volume 1435 Folio 939 of the Register Book of Titles to the Purchaser and/or nominee and on the registration of First Legal Mortgage to Metro Funding Corporation of One Kalisa Way, Suite 310, Paramus, New Jersey 07652, United States of America …. and the registration of the Vendors' Mortgage by the Purchaser in favour of the Vendor.

ENCUMBRANCES

Free from encumbrances save and except the restrictive covenants and easements (if any) endorsed on the Certificate of Title for the said property.‘

• (i) The sum of US $130,000.00 shall be the deposit.

• (ii) The sum of US $20,000.00 is hereby acknowledged as paid to the Vendor by the Purchaser.

• (iii) The sum of US $45,000.00 shall be a further payment on account of the Purchase Price.

• (iv) The sum of US $654,500.00 payable on completion less monies payable for outstanding utilities, taxes and balance due to discharge mortgage noted on the Certificate of Title.

• (v) The sum of US $50,000.00 payable on or before three (3) weeks after completion. Balance Purchase Money of Four Hundred Thousand United States Dollars (US $400,000.00) shall be secured by a Vendor's Mortgage in favour of the Vendor payable within three (3) years of the date of the Agreement for Sale with interest at the rate of four percent (4%) per annum. The Vendor's mortgage is subject to the first legal mortgage in favour of Metro Funding Corporation and as such the first legal mortgage has priority in registration and discharge in relation to the Vendor's Mortgage.

  ……..

11 The Agreement also contained the following special conditions:

‘5. The Purchaser shall obtain a Commissioned Land Surveyor's Report prior to completion at its own expense on (and) the completion of this Agreement by the Purchaser is conditional upon the report being favourable, and the Vendors shall be under a duty to remedy any effect (defect) in title revealed by this report…….

8. On the signing of this Agreement for Sale;

• i) The Vendors attorneys-at-Law shall give the Purchaser a written undertaking to register the Purchasers' name on Certificate of Title, registered at Volume 1345 Folio 939 in exchange for the sum of Six Hundred and Fifty Four Thousand Five Hundred United States Dollars (US $654,500.00) or the balance remaining after outstanding utilities, taxes and balance due to discharge mortgage noted on Certificate of Title paid.

• ii) The Purchaser shall give the Vendors Attorneys-at-Law a written commitment to pay the sum of Six Hundred and Fifty Four Thousand Five Hundred United States Dollars (US $654,500.00) or the balance thereof on receipt of Certificate of Title registered at Volume 1345 Folio 939 with the Purchasers and/or nominee registered thereon.

• iii) The Purchaser shall give written undertaking to the Bank of Nova Scotia Jamaica Limited in respect of Mortgage No. 1177945 the balance due to discharge the mortgage in exchange for executed discharge of Mortgage and Duplicate Certificate of Title registered at Volume 1345 Folio 939. The Purchaser shall forward both Discharge of Mortgage and Duplicate Certificate of Title registered at Volume 1345 Folio 939 to the Vendors Attorneys-at-Law. The balance due to discharge the aforesaid mortgage...