Daley (Rudolph) v RBTT Bank Jamaica Ltd Etal Walters v Rudolph Daley, RBYY Bank Jamaica Ltd, Harley Corporation Guarantee Trust Company Ltd Harley Corporation Guarantee Trust Company Ltd v Etal Walters; Etal Walters v Rudolph Walters and RBYY Bank Jamaica Ltd [Consolidated Suits]
| Jurisdiction | Jamaica |
| Judge | SYKES J. |
| Judgment Date | 19 January 2007 |
| Judgment citation (vLex) | [2007] 1 JJC 3001 |
| Date | 19 January 2007 |
| Court | Supreme Court (Jamaica) |
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN COMMON LAW
REAL PROPERTY - Mortgage - Exercise of power of sake
1. This case raises two major issues. The first is, what is the nature of the duty imposed on the mortgagee who exercises his power of sale. An additional question is whether that duty arises in equity exclusively, or concurrently with the common law and if concurrent, is it in the common law tort of negligence. The second is whether a registered proprietor who purchased property from a mortgagee exercising his power of sale can have his title impeached under the Registration of Titles Act ("RTA") on the ground of fraud. I shall give, first, a brief overview of the factual context in which these two issues arose; second, my understanding of the law in respect of the two major issues identified; third, analyse the evidence as it relates to the contested issues of fact, and then apply the law to the facts I have found and fourth, my conclusion. Between the first and second sections I shall deal with two preliminary issues, namely, amendments to the pleadings and whether fraud has been sufficiently pleaded for it to be adjudicated upon.
PART ONE
Summary of facts
2. I should indicate that Mr. Daley's evidence was in the form of an affidavit which was sworn much earlier in the proceedings. He died and an order was made at case management that the affidavit be admitted in evidence at this trial. Similarly, Mrs. Joy Traille, a witness for RBTT Jamaica Ltd., was absent from the island at the time of the trial and I ordered, at the commencement of the trial, that her witness statement be admitted into evidence.
3. Like many Jamaicans, Mr. and Mrs. Walters wished to own their own home. They wished to have a bit of land on which they could live in peace with neighbours, nature, family and friends. They found that land. The fact that divine services from nearby church had deterred previous interested parties was of no moment. For them, the loud message about the Almighty was but a minor inconvenience in exchange for security of tenure.
4. The Walters agreed to purchase the land from Mr. Daley, the then registered proprietor, for $170,000. According to a receipt dated December 12, 1992, they paid $100,000.00 to Mr. Daley for this bit of land. It is registered land. It is registered at volume 1022 folio 570 of the Register Book of Titles. The property is located at Exchange, a few miles from Ocho Rios in the garden parish of St. Ann. Not only did the Walters purchase the property, they have since built a house.
5. When they bought the land, it was subject to a mortgage in favour of the then Jamaica Citizens Bank, a bank that perished in the financial sector crisis of the 1990s. Mr. Daley stood as guarantor for Mr. Martin who, in 1991, applied for loan from Jamaica Citizens Bank (now RBTT Bank Jamaica Limited) ("the bank") which was disbursed in May 1992. As guarantor the bank requested and was granted a mortgage over the property. The limit of the guarantee was JA$80,000. Mr. Martin has defaulted and has since decamped leaving behind his debt. The bank has enforced its power of sale under the mortgage. The property was sold to Harley Corporation Guarantee Trust Company Limited ("the company" or "Harley Corporation") for the paltry sum of $200,000.00. The company is now the registered proprietor. It is now common ground that the property was worth at least $2,000,000.00 at the time of the sale. The sale was effected by an agreement for sale dated February 20, 1995. The transfer was registered on March 6, 2005.
6. One may ask, what is the problem? The problem is that Mr. Walters is alleging that at the time the bank sold the property to the company, the bank and the company knew that he had bought the land. He alleges further that the company knew that he had built a house and was in occupation. The company is saying that it is a bona fide purchaser for value without notice. The bank is saying that it acted properly save for selling at an undervalue.
7. In Jamaica, mortgagees of registered land are required to send a notice to the mortgagor before exercising the power of sale. The bank sent out the statutory notice required under section 106 of the RTA and the notice of default, both dated January 25, 1994. Both documents had the incorrect address. They were addressed to Mr. Rudolph Daley c/o Happi Holiday Tour and Rental 3 Rennie Road, Ocho Rios P.O., St. Ann. This was the incorrect address. There is a 3 Rennie Road but Mr. Daley said that he has never lived there and had no connection with that address. Mr. Daley had his offices at 3 Rennie Street, Ocho Rios, St. Ann. The address of the mortgagor as noted in the schedule to the mortgage instrument is Ocho Rios Post Office, St. Ann. In the instrument of guarantee Mr. Daley is noted as being at Shaw Park Ridge, Ocho Rios, St. Ann. His affidavit described his true place of abode as Shaw Park Ridge, Ocho Rios, St. Ann. None of the documents executed between Mr. Daley and the bank has 3 Rennie Road.
8. The notice of default and the statutory notice stated the incorrect principal and necessarily, the incorrect amount owed if interest is added. The notice of default and the statutory notice stated that the principal owed was $92,822.21 with interest as January 25, 1994, of $31,998.38 making a total of $124, 820.59.
9. The sale to Mr. Walters was in clear breach of the mortgage agreement between Mr. Daley and the bank. There is no evidence that the Walters knew of this term in the mortgage. It is now agreed that at the time of the sale to Mr. Walters, Mr. Daley did not inform the bank that he had sold the property.
10. There is a conflict on the evidence between Mr. Walters and Mr. Daley on the year of the sale. Mr. Walters says it was December 12, 1992, and Mr. Daley says it is 1994. I have accepted that it was December 1992 because there is a receipt dated December 12, 1992 acknowledging that Mr. Daley received $100,000. The body of the receipt says that it was a deposit on land at volume 1022 folio 570 part of Exchange. There is no evidence suggesting that the receipt was not issued by Mr. Daley to Mr. Walters. In fact, this case has been conducted on the basis that Mr. Daley indeed sold the land to Mr. Walters with the only issues being, whether the sale was a breach of the mortgage agreement between Mr. Daley and the bank, and the effect of such a sale. I therefore find as a fact that the agreement was entered into or about December 1992. There was no written sale agreement or other documents regarding the sale other than the receipt in December and other receipts to which I shall make reference. I also accept the evidence of Mrs. Walters that the transaction took place in December 1992. This is consistent with the rest of the evidence concerning the provision of electricity which I shall examine later.
11. Mr. Walters testified that he was put into possession in December of 1992. He also said that he cleared the land, knocked down the building that was there and erected a house that was completed by June 1993. A shop was also built but it was not rendered or painted. Mr. Walters testified further that he and his family began occupying the house in June 1993 and finally moved in completed in December 1993. There is no evidence that the bank knew of these activities before 1994. Mrs. Walters appears more certain about the events involved in the construction of the house and where there is a conflict between her and her husband on this point I prefer the testimony of Mrs. Walters.
12. Mr. Rudolph Daley on the other hand said at paragraph 8 of his affidavit that the construction activities of Mr. Walters were completed in July 1994. This assertion is not consistent with the letter to which I am about to refer. There is a letter dated December 7, 1993, from Mr. Daley to the Jamaica Public Service Company authorising the company to provide electricity to property registered at volume 1022 folio 570. There is also another letter dated December 9, 1993, signed by Mr. Walters granting permission for his wife to conclude a contract for the supply of electricity to the property. These letters are more consistent with completion of construction in 1993 than in 1994, so, on a balance of probabilities I find that the house was completed in 1993. In matters of this nature the court ought to have great regard to...
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