Cornerstone Investments & Finance Company Ltd v Imorette Palmer and Marcia Susan Gallimore
|DOWNER, J.A. (Dissenting) , PAUL HARRISON, J.A : , WALKER. J.A.: , DOWNER, J.A.
|29 July 2005
|JM 2005 CA 38
|Judgment citation (vLex)
| 7 JJC 2918
|Court of Appeal (Jamaica)
|29 July 2005
REAL PROPERTY - Mortgage agreement
By a majority [P. Harrison, Walker, JJA; Downer, JA (Dissenting)]
1. Appeal allowed.
2. Costs both here and below to the appellant to be agreed or taxed.
Imorette Palmer and Marcia Gallimore the Respondents, in this appeal are the registered owners along with Margaret Salter of a property, in Retreat and Norbrook in the parish of St. Andrew. On the face of the title, the property was mortgaged for US$250,000 on November 19, 1997 to Cornerstone Investments and Finance Company Ltd, the Appellant. The Respondents were sureties for a loan stated to be US$250,000, to Kenroy Salter from the Appellant. The Respondents guaranteed "the loan" and executed a mortgage on the Norbrook Property as security. It should be stated that the Respondents are the mother-in-law and sister-in-law of the borrower, Kenroy Salter.
Kenroy Salter has stated in his affidavit that he borrowed US$90,000 from the Appellant and it was proved by the Appellant that he guaranteed a loan of US$160,000 from the Appellant to Desmond Rankine. There is evidence from the Appellant suggesting that Salter's guarantee was for the debt owed by companies dominated by Rankine. It ought to have been easy for the Appellant to adduce the documents showing Rankine's default to the Appellant and that Salter was informed of this. Although this was specifically requested by the Court the documents were not produced. They may have an important bearing on the case. There was no evidence to suggest that the Respondents knew of the Rankine obligations. Salter stated on page 4 of the Record:
"2. That on or about October, 1997, I applied for a loan from the defendant company. The loan was for US$90,000.00 however, it was agreed between the defendant and I that to the extent that I may require further loan advances in the future the loan documentation would be prepared to reflect a loan of US$250,000.00 so that if and when those further advances were to be made the disbursement would be expedited as it would not be necessary of (sic) any further documentation to be executed."
Here is the second Respondent's affidavit at page 34 of the Record on the issue:
"3. I have read the Affidavit of KENROY SALTER filed herein and confirm that Kenroy Salter requested that my mother the first Plaintiff, my sister MARGARET SALTER and I provide collateral for a loan which he had sought from the Defendant for US$90,000.00. We agreed and in pursuance of the agreement we agreed to grant to the Defendant a first legal mortgage over the property aforesaid and to execute a guarantee in favour of the Defendant.
4. That by an instrument of Mortgage executed on the day of 1997, (sic) I along with Imorette Palmer, my mother and Margaret Salter, my sister executed a mortgage and a guarantee over the property aforesaid in favour of the defendant for a loan which was to be granted to Kenroy Salter. Both the mortgage and the guarantee showed that the principal sum loaned was US$250,000.00.
5. The defendant did not in fact loan the sum of US$250,000.00 to the principal debtor as set out in the agreement but the sum of JA$3,300,000.00 being the agreed Jamaican dollar equivalent of US$90,000.00."
The incident which gave rise to these proceedings was stated by Kenroy Salter. His affidavit evidence was that on 28 th August 1998 the Appellant sent out a Statutory Notice to sell the property in issue. Mr. Gordon Brown, the Attorney-at-law, for the Appellant confirms this. He has stated that the Rankine obligations fell into arrears and that the Appellant took steps to realize its security interest in the collateral provided by the Respondents and Mr. Salter as security for the loan. It was in these circumstances that the Respondents instituted proceedings in the Supreme Court by Originating Summons before Reid, J. The details of the Summons were as follows at page 59 of the Record:
" A Declaration that:
i) The loan agreement dated 19 th November, 1997 between the defendant and Kenroy Salter is void and unenforceable as being in breach of section 8 of the Moneylending Act.
ii) That the Guarantee and the Mortgage executed by the plaintiffs as collateral security for the loan are void and unenforceable in that the documents failed to comply with the provisions of the Moneylending Act and in particular section 8 thereof.
iii) Alternatively that the interest charged in respect of the sum "actually" lent is excessive and that the transaction is harsh and unconscionable and for an order that the transaction b/e (sic) re-opened and that an account be taken between the parties.
An order that:
a) The said mortgage over premises known as Townhouse # 12 Airdre Mews which premises is and registered at Volume 1207 Folio 678 and guarantee signed by the defendants in favour of the plaintiff be cancelled and delivered up to the plaintiffs.
b) The duplicate Certificate of Title in respect of premises registered at Volume 1207 Folio 678 of the Registered Book of Titles be delivered to the registered proprietors thereof."
The order below reads as follows at page 85 of the Record:
"1. The loan agreement dated 19 th November, 1997 between the Defendant and Kenroy Salter is void and unenforceable as being in breach of section 8 of the Moneylending Act.
2. The Guarantee and the Mortgage executed by the Plaintiffs as collateral security for the loan are void and unenforceable in that the documents failed to comply with the provisions of the Moneylending Act and in particular section 8 thereof.
3. The said mortgage over premises known as Townhouse # 12 Airdrie Mews which premises is registered at Volume 1207 Folio 678 of the Register Book of Titles and guarantee signed by the defendants in favour of the Plaintiff be cancelled and delivered up to the Plaintiffs.
4. The duplicate Certificate of Title in respect of premises registered at Volume 1207 Folio 678 of the Register Book of Titles be delivered to the registered proprietors thereof.
5. Costs to the Plaintiffs to be agreed or taxed."
The Respondents are contending, that the order of Reid J. ought to be affirmed. There was no cross-examination in the court below, but the necessary findings were made on the basis of documentary evidence in the court below and in this court.
Regrettably the learned judge gave no reasons for his decision. It is a surprising omission from an experienced judge. Reasoned decisions are an essential judicial function. Litigants expect it so as to determine if there ought to be a further appeal. This court as a court of review expects it so that appeals can be properly conducted. Also Judges are required to make a contribution to the development of the common law by their analysis of evidence, their evaluation of authorities, their construction of documents, statutes and the Constitution.
Despite the absence of reasons it is clear that the learned judge below considered these issues before making his Order. Firstly, he must have decided that the transaction between Salter and the Appellant was within the intendment of the Moneylending Act (the "Act") as the rate of interest stated as 22% per annum in substance exceeded that prescribed by the Minister. Secondly, he must have reasoned that the Loan Agreement, the guarantee and the mortgage were in contravention of section 8 of the Act. Thirdly, to order that the guarantee and mortgage be cancelled and that the duplicate certificate of title be returned to the Respondent means that the learned judge must have taken into account the provisions of sections 2 and 3 of the Act as well as the equity jurisdiction to set aside the aforesaid guarantee and mortgage.
(i) Was the transaction between Salter and the Appellant moneylender exempt from the provisions of the Act?
It should be stated at the outset that it is common ground that the learned judge below decided this case without the 1997 amendment to the Act. This issue of exemption from the Act was argued initially on a preliminary point of law and then on the merits of the case. Section 13(1)(i) of the Act reads:
"13.-(1) This Act shall not apply to-
(i) any loan or contract or security for the repayment of money lent at such rate of interest not exceeding such rate per annum as the Minister may by order *prescribe"
The Moneylending (Prescribed Rates of Interest) Order 1997 Jamaica Gazette Supplement dated August 27 sets out the prescribed rates. It reads:
"In exercise of the power conferred upon the Minister by sections 3 and 13 of the Moneylending Act, the following Order is hereby made:-
1. This Order may be cited as the Moneylending (Prescribed Rates of Interest) Order, 1997.
2. For the purposes of section 3 of the Act, an interest rate of forty per centum per annum is hereby prescribed.
3. For the purposes of paragraph (i) of section 13 of the Act, an interest rate of twenty-five per centum per annum is hereby prescribed.
Dated this 27 th day of August, 1997.
No. 840/01 IV OMAR DAVIES, Minister of Finance and Planning"
The "note or memorandum" at page 10 of the Record states the interest and principal as follows:
"14. This Agreement shall in all respects be governed in accordance...
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