Chase Merchant Bankers Jamaica Ltd et Al v Rose Hall Ltd et Al

• Jurisdiction: Jamaica
• Judge: Zacca, P.,Rowe, J.A.,Campbell, J.A.
• Judgment Date: 23 June 1982
• Neutral Citation: JM 1982 CA 33
• Docket Number: Civil Appeal No. 78 of 1980
• Court: Court of Appeal (Jamaica)
• Date: 23 June 1982

Court of Appeal

Zacca, P. Rowe, J.A. Campbell, J.A. (Ag.)

Civil Appeal No. 78 of 1980

Chase Merchant Bankers Jamaica Ltd et al

and

Rose Hall Ltd et al

Appearances:

Mr. D. M. Muirhead, Q.C. and Mr. J. Leo Rhynie, Q.C., instructed by Mr. Nunes of Judah, Desnoes, Lake, Nunes, Scholefield and Co. for appellants.

Mr. Richard Mahfood, Q.C., and Dr. L. Barnett instructed by Mr. P. Millingen of Clinton Hart and Co. for the respondents.

Stay of proceedings - Inherent jurisdiction of court to stay local proceedings pending outcome of foreign proceedings

Facts: Loan to first respondent from first appellant. As security for loan first respondent gave a second mortgage on a hotel owned by its subsidiary and a first mortgage on land, which it directly owned. Lender gained control of subsidiary company and offered for sale hotel and land. Controller of respondent company and subsidiary was a citizen of the United States. Action brought in United States against parent company of first appellant for, inter alia, interference with negotiations between first plaintiff and Government of Jamaica touching the sale of hotel assets resulting in a non-consummation of an offer and acceptance of sale. Whether the court had an inherent jurisdiction to stay proceedings in the instant case.

Held: Appeal dismissed (Rowe J.A dissenting).

Zacca, P.

1 I have had an opportunity of reading the judgments of Rowe, J.A. and Campbell J.A. (Ag.).

2 The real issue in this appeal was whether there was an inherent jurisdiction in the court to stay the proceedings in the instant case. There is no doubt that the court has an inherent jurisdiction to stay proceedings but it is being contended by the appellant that the court can only stay proceedings where the application is made by the defendant.

3 In the exercise of its discretion to order a stay of proceedings, the court cannot and should not be restricted, in view of its inherent jurisdiction to order a stay.

4 If the justice of the case demands a stay of proceedings, then it should not matter whether it is the plaintiff or defendant who is making the application.

5 Campbell, J.A. (Ag.) has effectively dealt with the facts of the instant case and the legal principles involved in this appeal, and I agree with the conclusions, which he has arrived at.

6 I too would dismiss this appeal with costs to the respondents to be taxed or agreed.

Rowe, J.A.

7 The plaintiffs in suit E 211/76 who are the respondents in this appeal by their summons applied to Parnell, J. for an order:

• “1. That the date fixed for the trial of the action herein be vacated,

• 2. that the case be removed from the trial and/or term lists and be only restored thereto by leave of a judge; and/or

• 3. that all further proceedings in this action be stayed, on the grounds that:

  • (a) there is pending in the United States District Court for the District of Delaware against Chase Manhattan Overseas Banking Corporation and Holiday Inns Inc. an action claiming damage inter alia for the wrongful conduct of the defendants in or about the sale or the exercise of a power of sale under a mortgage of property which is the subject matter of the action herein;

  • (b) the Delaware action deals more comprehensively with the issues between the parties;

  • (c) Delaware is the forum conveniens and has been so adjudged in litigation between the parties or on behalf of the parties;

  • (d) the continuance of the action herein would be an abuse of the process of the court and/or oppressive and vexatious to the plaintiffs and be an injustice to them, the adjournment and/or stay of the action would cause no injustice to the defendants, and relevant parties are amenable to the jurisdiction of the said Delaware Court in which justice can be done between the parties at substantially less inconvenience.”

8 This application was strongly resisted by the defendants who are the present appellants but on December 19, 1980 Parnell, J. made an order in following terms:

“That all further proceedings in this action be and are hereby stayed while there is pending for hearing and determination Civil Action No. 79-182 in the United States District Court of Delaware and brought by the first plaintiff and the second plaintiff (as an involuntary party) against Chase Manhattan Overseas Banking Corporation and Holiday Inns Inc. as defendants.

The question as to the incidence of costs occasioned by the hearing is reserved.”

9 Parnell J. delivered a written judgment on February 12, 1981 on which occasion he ordered that the defendants (appellants) should have their costs incident to the application up to and including, November 3, 1980 and that the defendants (appellants) should pay to the plaintiffs the costs incurred by the plaintiffs after November 13, 1980 including the costs of the five day hearing. There was a subsequent variation of this order for costs. However, as the present appellants had put in their notice and grounds of appeal well before the order for costs was made as set out in the written judgment and as they did not file a further appeal against the order for costs after February 12, 1981, their attempt to demonstrate that the learned trial judge had erred in law in penalising the defendants in costs, was still-born.

10 I will essay a short history of the litigation preceding the summons before Parnell, J. and for this purpose I will treat the respondents as if they were for all purposes a single entity with the same rights, entitled to the same remedies, and called by the composite name “Rose Hall', except where that would lead to confusion. Rose Hall owned all the shares in Rose Hall (H.I.) Ltd and in addition in excess of three thousand acres of land all situate in Jamaica. Rose Hall (H.I.) Ltd owned a hotel called the Rose Hall Holiday Inn which in 1976 and previously was operated by Holiday Inns of the Bahamas Limited whose parent company was Holiday Inns Incorporated, a corporation of Tennessee, U.S.A. Rose Hall (H.I.) Ltd had an indebtedness to the Bank of Nova Scotia, Toronto, Canada of U.S. 6.5 million dollars and as security for the loan the Bank held a first mortgage over the hotel and its eleven acres of land Rose Hall (H.I.) Ltd. secured a second loan of U.S. 3 million dollars in 1974 from Chase Merchant Bankers Jamaica Limited, the security for which was all the shares in Rose Hall (H.I.) Ltd and 3,000 acres of land the property of Rose Hall. Rose Hall (H.I.) Ltd made default under the loan agreement with the appellant, hereinafter called Chase, and when pressed for payment Rose Hall having exhausted all its endeavours to sell portions of the 3,000 acres of land for development purposes entered into negotiations with the Government of Jamaica through the Urban Development Corporation for the sale to Government of the Hotel. Lengthy negotiations ensued which culminated in the negotiator for the Urban Development Corporation agreeing to recommend to the Government a purchase price of U.S. 14.25 million dollars, which was later scaled down to U.S. 13 million dollars. One of the bases for arriving at the hotel's market value was the continued participation of the lessees as operators of the hotel on the then existing contractual terms. By early 1976, however, Holiday Inns presented to the Urban Development Corporation a posture of being an unwilling tenant, which had been sustaining substantial losses in the operation of the hotel and so would be prepared to devote itself to every effort to re-negotiate the terms of the operating lease. From the point of view of the Government the sine qua non for the negotiated price was the on-going lease and when this bedrock came loose the negotiations collapsed. Faced with a depressed real estate market, a depressed tourist industry and no alternative proposal by Rose Hall to pay either accrued arrears or to service current interest and principal repayments, Chase offered to sell to the Government the shares in the Rose Hall (H.I.) Ltd for U.S. 2.225 million dollars and the 3,000 acres of land for U.S. 1 million dollars. In purchasing the shares Government would become liable for the debt to the Bank of Nova Scotia, Toronto and to sundry creditors to a further amount of $750,000.00. Government accepted Chase's offer and completion date was set for December 31, 1976. A feature of the negotiations between Government and Chase was that Chase Merchant Bank N.A. the parent company of the Jamaican corporation would lend to the Government of Jamaica the amount of U.S. 5 million dollars to finance the purchase.

11 In October 1976, Rose Hall brought an action in which they sought declarations that Rose Hall (H.I.) Ltd was the beneficial owner of the lands sought to be transferred to the Government by Chase subject only to the legal mortgage in favour of Chase and an injunction to restrain Chase from selling and transferring the 3,000 acres of land and also the shares in Rose Hall (H.I.) Ltd and in the alternative Rose Hall claimed damages. Chase put in a defence and counter-claim. The counter-claim sought a declaration that Chase was legally entitled to sell the lands and shares held by it as security under the loan agreement. An interim injunction having been granted, the application for an interlocutory injunction came before me in my capacity as a Judge of the Supreme Court. I gave an oral decision on November 22, 1976 and put my reasons in writing on January 27, 1977. I refused to grant the interlocutory injunction on the principle that as the matters at issue between the parties stood at that time damages would be an adequate remedy, and Chase which was said to have assets in Jamaica in excess of 10 million dollars and whose stated intention was to continue in business in Jamaica could meet whatever damages it was then estimated could be awarded to Rose Hall. The respondents appealed against that decision but abandoned their appeal...