Carmen Farrell and Others v Lascelle Reid and Others

• Jurisdiction: Jamaica
• Judge: Mangatal J:
• Judgment Date: 17 June 2011
• Judgment citation (vLex): [2011] 6 JJC 1703
• Court: Supreme Court (Jamaica)
• Date: 17 June 2011
• Docket Number: CLAIM 2008 HCV 05873

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CIVIL DIVISION

CLAIM 2008 HCV 05873

BETWEEN

CARMEN FARRELL

1 ^ST CLAIMANT

AND

DESMOND FARRELL

2 ^ND CLAIMANT

AND

WADE FARRELL

3 ^RD CLAIMANT

AND

CURTIS FARRELL

4 ^TH CLAIMANT

AND

CARL FARRELL

5 ^TH CLAIMANT

AND

LASCELLE REID

1 ^ST DEFENDANT

AND

INTERNATIONAL AIRLINK LIMITED

2 ^ND DEFENDANT

AND

NATIONAL COMMERCIAL BANK JAMAICA LIMITED

3 ^RD DEFENDANT

IN OPEN COURT

Ms. Arlean Beckford for the Claimants.

Mrs. Sandra Minott-Phillips and Mrs. Alexis Robinson instructed by Myers

Fletcher & Gordon for the 3 ^rd Defendant.

POWER OF ATTORNEY-FORGERY-FRAUD- WHETHER CAPABLE OF RATIFICATION-ESTOPPEL-WHETHER BANK'S MORTGAGE REGISTERED ON TITLE INDEFEASIBLE-_WHETHER BANK OWES DUTY OF CARE SEPARATE AND APART FROM CONTRACTUAL DUTIES-WHETHER SPECIAL RELATIONSHIP-WHETHER FIDUCIARY RELATIONSHIP-EQUITABLE MORTGAGE

Mangatal J

1 The Claimants are the registered owners of two properties, being Lot 120 and 121, Spring Valley Estate, Tower Isle in the Parish of Saint Mary, now known as Jamaica Beach, being all those parcels of land comprised in Certificates of Title registered at Volume 966 Folio 344 and 1319 Folio 810 respectively.

2 The 1 ^st Defendant ‘Mr. Reid’ is a mortgage broker and according to the 1st Claimant ‘Mrs. Farrell’, gave his address to her as being 32 Gloucester Avenue, Montego Bay in the Parish of Saint James.

3 The 2nd Defendant ‘Airlink’ is a company duly incorporated under the laws of Jamaica and has its place of business at Sangster's International Airport in the Parish of Saint James.

4 The 3 ^rd Defendant ‘NCB’ is a company duly incorporated under the Laws of Jamaica with registered offices at 32 Trafalgar Road, Kingston 10, and is in the business of banking.

THE CLAIMANTS' CASE

5 In the Amended Particulars of Claim it is pleaded that in or about January of 2007 Mrs. Farrell was in the process of developing Lot 120 and this involved constructing a building comprising apartment units for rental to tourists and local residents. It was in respect of building those units, Block B, on Lot 120 that Mrs. Farrell borrowed $20 Million from NCB in or about July 2006. An apartment Complex, Block A, was already constructed on Lot 121.

6 In January 2007 Mrs. Farrell approached Mr. Reid, who she had known before whilst she at times resided in Canada, and who had previously handled business for her in his capacity as mortgage broker. She indicated that she needed U.S. $400,000.00 to complete the development and enquired whether he was able to obtain financing from a private individual or a company, not a bank, which was not in the business of providing loans but with funds to do so at more reasonable rates or on better terms than those being offered by banks or other financial institutions.

7 Mrs. Farrell states that in reliance on the assurance provided by Mr. Reid, she provided him with the duplicate Certificate of Title in respect of Lot 121.

8 On or around January 31, 2007 Mrs. Farrell states that Mr. Reid provided her with the sum of US $100,000.00, being a part of the loan that he had promised to obtain for her. She received a further sum of US $130,000.00 from Mr. Reid on or around February 2007.

9 Mrs. Farrell also received a cheque of JA $16,640,710.00 dated February 23 2007 drawn on an account held by Airlink at First Caribbean International Bank (Jamaica) Limited. She states however that she did not negotiate this cheque as Mr. Reid instructed her not to negotiate it. This cheque was subsequently cancelled. Mrs. Farrell states that she has received no further sums from Mr. Reid or Airlink.

10 As the cheque was drawn on the account of Airlink, Mrs. Farrell believed that it was Airlink that had provided the loan financing.

11 According to Mrs. Farrell, prior to receiving the funds she had requested from Mr. Reid details as to the loan transaction such as the name of the debtor (paragraph 12 of Amended Particulars of Claim, I think she must mean creditor) and the documents to be signed. Mr. Reid failed, neglected and/or refused to provide the information requested.

12 In or about March 2007 Mrs. Farrell tried to have the loan transaction formalized and to commence repayment so as to secure the return of the Duplicate Certificate of Title for Lot 121. She commenced repayment and paid to Mr. Reid the sum of US$36,000.00 and J$400,000.00 on diverse dates.

13 In or around June 2008, Mrs. Farrell attended a meeting with representatives of NCB. Mrs Farrell states that it was at that meeting that she became aware that Lot 121 was being used by Airlink to secure loan financing from NCB.

14 Mr. Reid held himself out as being the agent of the Claimants pursuant to Power of Attorney dated 19 ^th January 2007 and recorded at the Islands Records Office at Liber New Series 16 Folio 205.

15 The Amended Particulars of Claim state that none of the Claimants executed the Power of Attorney and at the time of the purported execution the 2 ^nd , 3 ^rd and 4 ^th Claimants were not present in the jurisdiction and did not in fact sign as it purports.

16 The Power of Attorney purportedly authorised Mr. Reid to act for the Claimants specifically in relation to the property and in the names of the Claimants and on their behalf to do, perform and execute all acts and deeds which the Claimants are empowered to do, perform and execute in relation to the property, and to execute all or any of certain acts or things as Mr. Reid shall in the interests of the Claimants think proper.

17 Airlink and NCB entered into a loan agreement for the sum of US$1,600,000.00 to be disbursed in two loans as follows:

• (i) Loan A-Six Hundred Thousand United States Dollars.

• (ii) Loan B-One Million United States Dollars.

18 Amongst other matters, security for Loan A, was a first legal mortgage over the property Lot 121 registered at Volume 1319 Folio 810 registered and stamped to cover US $600,000.00 and interest (executed under Power of Attorney granted to Lascelles Reid).

19 The execution of this mortgage by Mr. Reid exceeded any authority purportedly granted under the Power of Attorney.

20 The Claimants aver that Mr. Reid and Airlink acted fraudulently and the Amended Particulars of Claim at paragraphs 24 and 25 specifies the alleged fraud and its effects as follows:

24…..

PARTICULARS OF FRAUD OF THE FIRST DEFENDANT

• (i) Pledging the Claimants'- Certificate of Title for the said land a security for loan financing from the 3 ^rd Defendant;

• (ii) Holding himself out to the 3rd Defendant as being authorised to use the Claimants' Certificate of Title as security for loan financing for the benefit of the 2 ^nd Defendant provided by the 3 ^rd Defendant;

• (iii) Preparing a document containing a Power of Attorney and investing himself with powers thereunder to act on behalf of the Claimants without obtaining any express or implied authorization form the Claimant to do so;

• (iv) Preparing a document containing the Power of Attorney without the Claimants' authority and forging the Claimants' signatures or causing same to be forged;

• (v) Representing to the 2 ^nd and 3 ^rd Defendants that the Power of Attorney and the signatures thereon were authentic and that he was authorized to so act pursuant to the said Power of Attorney;

• (vi) Representing to the 2 ^nd and 3 ^rd Defendants that he was authorized to use the Claimants' Certificate of Title for mortgage financing;

• (vii) Forging the Claimants' signatures to the Power of Attorney;

• (viii) Causing and /or permitting the Claimants' signature to be forged on the Power of Attorney;

• (ix) Causing and/or permitting the Claimants' Certificate of Title to be used as security in the loan transaction between the 2 ^nd and 3 ^rd Defendants.

PARTICULARS OF FRAUD OF THE SECOND DEFENDANT

(i) Using causing and/or permitting the said property to be used as security for the loan from the 3 ^rd Defendant.

25. The Transaction between the Defendants was to the detriment of the Claimants. The Claimants did not derive a benefit from the loan financing granted by the 3 ^rd Defendant to the 2 ^nd Defendant.

21 In relation to NCB, this is what the Claimants set out at paragraphs 26-31 (inclusive) of the Particulars of Claim:

• 26. The 3 ^rd Defendant received the Power of Attorney and was consequently in a position to read and construe the said Power of Attorney and ascertain the scope of the 1 ^st Defendant's authority under the said Power.

• 27. The 3 ^rd Defendant at all material times was aware that the purpose of the loan was to benefit the 2 ^nd Defendant and not the Claimants and that the security for the loan financing was over the Claimants said property.

• 28. The 3 ^rd Defendant knew or ought reasonably to have known that the execution of a mortgage over the said land was detrimental to the interest of the Claimants.

• 29. The 3 ^rd Defendant in the circumstances is deemed to have knowledge of the fact that the actions of the 1 ^st Defendant exceeded the power purportedly granted by the Power of Attorney.

• 30. That the 3 ^rd Defendant being in a prior fiduciary position with respect to the Claimants as bankers and mortgagee acted in breach of this relationship.

  PARTICULARS OF BREACH OF FIDUCIARY DUTY

  • (i) Mortgaging and/or dealing with the Claimants' property without any authority so to do.

  • (ii) Proceeding to effect a mortgage over the Claimants' property of such a magnitude without assessing firsthand the Claimants' ability/or not to repay the purported loan.

• 31. That the 3 ^rd Defendant was negligent in the manner in which it conducted its business in particular, without regard to the interest of the Claimants.

  PARTICULARS OF NEGLIGENCE OF THE 3 RD DEFENDANT

  • (i) Failing to act in accordance with standard banking practices to the detriment of the...