Carmen Farrell and Others v Lascell Reid and Others

• Jurisdiction: Jamaica
• Court: Court of Appeal (Jamaica)
• Judge: Phillips JA
• Judgment Date: 16 July 2012
• Neutral Citation: JM 2012 CA 69
• Docket Number: SUPREME COURT CIVIL APPEAL NO 91/2011 APPLICATION NO 154/2011
• Date: 16 July 2012

Between

Carmen Farrell

Applicant/1st Appellant

and

Desmond Farrell

2nd Appellant

and

Wade Farrell

3rd Appellant

and

Curtis Farrell

4th Appellant

and

Carl Farrell

5th Appellant

and

Lascelle Reid

1st Respondent

and

International Airlink Limited

2nd Respondent

and

National Commercial Bank Jamaica Limited

3rd Respondent

[2012] JMCA App 16

SUPREME COURT CIVIL APPEAL NO 91/2011

APPLICATION NO 154/2011

JAMAICA

IN THE COURT OF APPEAL

INJUNCTION - Power of attorney - Whether power of attorney null and void on grounds of forgery - Whether claimants stopped by their conduct, deed and representation from denying authenticity of power of attorney - Whether the applicant's appeal has prospects of success

Miss Arlean Beckford instructed by Arlean D M Beckford and Company for the applicant/appellants

Mrs Sandra Minott-Phillips and Mrs Alexis Robinson instructed by Myers Fletcher and Gordon for the 3 ^rd respondent

IN CHAMBERS

Phillips JA

1 The application before me (No 154/2011), filed by Carmen Farrell, (‘the applicant’) on 29 July 2011 initially sought the following orders:-

• ‘(1) That execution of the Judgment by the Honourable Miss justice Mangatal on the 17 ^th day of June, 2011 be stayed until determination of the appeal.

• (2) A permanent injunction restraining the Defendant either itself, or by its servants and/or agents or any of them or otherwise howsoever, from selling, disposing of, transferring, charging diminishing the value of, parting with possession of, or in any way howsoever, dealing with any of Claimants properties

• (3) Such further or other relief this Honourable Court may deem just.’

2 On 17 June 2011, Mangatal J ordered as follows:

• ‘1. Judgment for the 3 ^rd Defendant against the Claimants, with costs to be taxed if not agreed.

• 2. Judgment for the Claimants against the 1 ^st defendant and the 2 ^nd Defendant.

• 3. The Power of Attorney dated 19 ^th January, 2007 and recorded at the Island Record Office Liber New Series 418 Folio 205 is null and void on the grounds of forgery and fraud on the part of the 1 ^st Defendant.

• 4. The Claimants are estopped by their conduct, deed and representation from denying the authenticity of the Power of Attorney as against the 3 ^rd Defendant.

• 5. The Claimants' claim for damages against the 1 ^st and 2 ^nd Defendants for fraud fails.

• 6. The Claimants' claim for damages against the 2 ^nd Defendant for breach of warranty of authority fails.’

3 The grounds of the application (No 154/2011) were:

• ‘1. The Applicants believe they have an appeal which has some prospects of success.

• 2. The likelihood of recovering any properties disposed of by the 3 ^rd Defendant where the appeal succeeds is highly improbable.

• 3. That it is in keeping with the overriding objectives of the Civil Procedure Rules.’

4 The application was supported by an affidavit sworn to on 29 July 2011 in which the applicant indicated that she was authorized to swear the affidavit on behalf of the other appellants who were her children. Her concern was that a direct consequence of the judgment of Mangatal J was that all the appellants were now liable to pay the 3 ^rd respondent US$ 600,000.00 together with interest and costs. She further deposed that the 2 ^nd respondent had obtained a loan from the 3 ^rd respondent and had used her certificate of title to secure the loan pursuant to a power of attorney, which the court had found to be fraudulent. She set out other documents which had also been used to secure the loan, but of significance was the first legal mortgage over lot 121, a residential complex at Jamaica Beach in Saint Mary comprised in Volume 1319 Folio 810 which certificate was registered in the appellants' name, and the mortgage was registered and stamped to cover US$600,000.00 with interest, which mortgage had been executed by the 1 ^st respondent by way of the said fraudulent power of attorney. There was also a guarantee by one Howard Levy stamped to cover US$ 600,000.00.

5 The applicant stated in her affidavit that she did not owe any debt to the 3 ^rd respondent and as Howard Levy had also guaranteed the debt he should be held liable for the payment of the same along with any losses she had suffered. The applicant's real anxiety was due to the fact that as the 3 ^rd respondent held the certificate of title it could dispose of the property and settle the loan from the proceeds of sale without taking into consideration that Howard Levy was a guarantor. She claimed that she had an appeal with good prospects of success; that the likelihood of recovering any properties disposed of by the 3 ^rd respondent was improbable; and that without the stay of execution she stood to be ruined financially. She gave the ‘usual undertaking as to damages in respect of the orders herein’.

6 At the commencement of the above application, the applicant indicated that she was not pursuing the request for a permanent injunction as stated in paragraph [1] herein, or for that matter any injunction at all.

The facts in outline

7 Based on how this application unfolded I will try to summarise the facts as briefly as possible.

The case for the applicant

The applicant's position is that she, along with the other appellants, were the registered owners of lots 120 and 121, Jamaica Beach, Saint Mary. The applicant had already borrowed J$20,000,000.00 on the security of the property at lot 120 from the 3 ^rd respondent for commercial development. She had decided that although she needed funds to further develop lot 121 she did not wish to obtain those funds through a bank or other recognised financial institution but through private loan financing. Pursuant to this plan she engaged the services of the 1 ^st respondent who was a mortgage broker, to arrange the alternate source of funds. She informed the 1 ^st respondent that she required US$ 400,000.00 to complete the project, she gave him the certificate of title in respect of lot 121, and he obtained some of the funds for her. There were two amounts of US$ 100,000.00 and US$130,000.00 which she received in cash, and then she was given a cheque in the amount of J$ 16, 640,710.00 which was drawn on the 2 ^nd respondent's account but which was not cashed on the instructions of the 1 ^st respondent. She assumed that the first two tranches which she had received had come from the 2 ^nd respondent. She never received the remaining amount. The first time, she said, that she was aware that the sums she had obtained had been sourced from the 3 ^rd respondent, was at a meeting held at their offices, which she thought was convened to discuss the arrears in respect of the loan which was secured by a mortgage on the certificate of title for lot 120. At that meeting she was informed that there was a mortgage endorsed on the certificate of title for lot 121 also to the 3 ^rd respondent, which had been executed by the 1 ^st respondent, signed pursuant to a power of attorney which permitted him to do so, and which power of attorney had been ‘signed’ by herself and her children and witnessed by a justice of the peace. It was her evidence that when informed in the meeting of this perfidy of the 1 ^st respondent, she ‘broke down and cried uncontrollably’. Subsequent to this, despite several efforts made to locate the 1 ^st respondent she had been unable to do so. The applicant maintained that the power of attorney which had been registered at the Island Records Office was null and void, as it had not been signed by her or her sons; that the instruments of mortgage and guarantee were also invalid having been signed by the 1 ^st respondent pursuant to a power of attorney which was invalid.

The case for the applicant

The case for the 3 ^rd respondent

8 The 3 ^rd respondent's position on all of this is that it had disbursed funds to the appellants in the amount of J$20,000,000.00 which funds were secured by way of a mortgage which was duly registered on the certificate of title for lot 120. The instruments of mortgage and guarantee securing the loan were signed by the applicant and her sons. The 3 ^rd respondent then loaned US$1,600,000.00 plus interest to the 2 ^nd respondent for the purpose of providing working capital and purchasing a Beech 1900 Airliner aircraft, disbursed by way of two loans for US$600,000.00 and US$1,000,000.00, respectively. The first loan was secured by a first legal mortgage on the certificate of title in respect of lot 121, registered in the names of the applicant and her sons. The instrument of mortgage (mortgage by way of guarantee) was signed by the borrower, the 2 ^nd respondent, and the 1 ^st respondent on behalf of the appellants, the guarantors, by virtue of the power of attorney. The instrument of guarantee was signed by the 1 ^st respondent (on behalf of the guarantors, the appellants) also by virtue of the power of attorney. The 3 ^rd respondent relied on the fact that the power of attorney bore the signatures of the appellants witnessed by a justice of the peace, and was stamped and registered at the office of titles and the Island Record Office.

9 It was the contention of the 3 ^rd respondent that it also had no reason to suspect the authenticity of the power of attorney as the appellants were customers in good standing and had signed letters, dated 20 and 22 February 2007, indicating their awareness of the transaction and agreement for the use of the property as security for the same. The power of attorney, the 3 ^rd respondent insisted, authorized the acts undertaken by the 1 ^st respondent, and the other instrument of guarantee was executed by Mr Howard Levy, the principal of the 2 ^nd respondent, who had also signed a promissory note.

10 On the 3 ^rd respondent's case, the 2 ^nd respondent defaulted with payments under the loan facilities...