Delroy Howell v Royal Bank of Canada
| Jurisdiction | Jamaica |
| Judge | Phillips JA,F Williams JA,P Williams JA |
| Judgment Date | 26 March 2021 |
| Neutral Citation | JM 2021 CA 34 |
| Docket Number | SUPREME COURT CIVIL APPEAL NOS 123 & 124/2015 |
| Court | Court of Appeal (Jamaica) |
[2021] JMCA Civ 19
IN THE COURT OF APPEAL
THE HON Miss Justice Phillips JA
THE HON Mr Justice F Williams JA
THE HON Miss Justice P Williams JA
SUPREME COURT CIVIL APPEAL NOS 123 & 124/2015
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Ransford Braham QC instructed by Braham Legal for Delroy Howell
Roderick Gordon and Miss Kereene Smith instructed by Gordon | McGrath for Ocean Chimo Limited
John Vassell QC, Mrs Julianne Mais-Cox and Mrs Trudy-Ann Dixon-Frith instructed by DunnCox for the respondents
This consolidated appeal challenges the decision of Edwards J (as she was then), given on 18 November 2015, granting summary judgment on two separate claims filed by Ocean Chimo Limited (Ocean Chimo) and Delroy Howell against the Royal Bank of Canada (the RBC), Samuel Billard, Raymond Chang, and Greg Smith (the respondents). The learned judge found that the claims made by Ocean Chimo and Mr Howell against the respondents regarding negligence, breach of contract, fraud, conspiracy to interfere with business relations, loss of reputation and breach of fiduciary duties were hopeless, without merit and devoid of any real prospect of success. Ocean Chimo and Mr Howell contend that the learned judge had erred in making that finding and she had also erred in her interpretation and application of Part 15 of the Civil Procedure Rules (CPR); in her understanding and application of principles relative to summary judgment applications; and her assessment of the law and evidence before the court.
In August 2005, RBTT Bank (Jamaica) Limited and RBTT Bank Limited (the lender banks) granted a loan to Ocean Chimo in the sum of US$20,000,000.00, which was increased to US$32,000,000.00 in April 2008. The loan was secured by, inter alia, a mortgage over property located at 77 Knutsford Boulevard, Kingston 5 (the Hilton Hotel, as it was then); a debenture over Ocean Chimo's fixed and floating assets; and an assignment of peril insurance and income payments to the lender banks. Mr Howell, Ocean Chimo's chairman and director, guaranteed the loan. Commitment letters were issued (dated 2 August 2005 and 18 April 2008) and the parties executed loan agreements (dated 16 September 2005 and 28 April 2008).
The lender banks claimed that the loan was in arrears, and so they effected a provision, contained in Ocean Chimo's commitment letter, which enabled them to increase the applicable interest rate. Ocean Chimo denied the lender banks' claim that it was in arrears and stated that they were wrong to increase or vary the interest rate. Thereafter, several disputes ensued between the lender banks and Ocean Chimo. The inability to solve those disagreements led to the filing of two claims.
The first claim was filed by Ocean Chimo against the lender banks on 27 May 2010. It sought, inter alia, an injunction restraining those banks, their directors, servants, or agents from appointing a receiver until the final determination of the action; damages for conspiracy to interfere with business relations; and costs. That claim was amended and filed on 8 June 2010 to include orders for various declarations. The final amendment to Ocean Chimo's claim form was filed on 30 November 2012. It changed the names of the lender banks to RBC Royal Bank (Jamaica) Limited and RBC Royal Bank (Trinidad and Tobago) Limited. Ocean Chimo also included the RBC as the 3 rd defendant and Messrs Billard, Chang and Smith as the 4 th, 5 th, and 6 th defendants (the respondents in this appeal). It was generally agreed that the RBC is the parent company of those subsidiary banks. Messrs Chang and Smith were referred to as employees of the lender banks, and Messrs Billard, Chang, and Smith as the servants and/or agents of the RBC and the lender banks. Ocean Chimo sought the following orders:
“1. Damages for fraud and/ or negligence arising out of the manner in which the [respondents] administered and conducted the affairs of the [lender banks] which resulted in the loss of the valuable property belonging to [Ocean Chimo].
2. Damages for Breach of Contract and/or Unjust Enrichment.
3. Damages for conspiracy to interfere with business relations.
4. Damages for loss of reputation.
5. Damages for breach of fiduciary duty.
6. Aggravated Damages.
7. Exemplary Damages.
[8.] Costs and attorneys-at-law fees.
[9.] Such other relief as this Honourable Court may deem just.” (Underlined as in original)
The second claim was filed on 26 November 2012 by Mr Howell against the respondents to this appeal. In that claim, Mr Howell sought damages for, inter alia, fraud and/or negligence (save and except against RBC); conspiracy to interfere with business relations; loss of reputation; and breach of fiduciary duty. Mr Howell made claims similar to those in Ocean Chimo's action, only he did so in his capacity of guarantor of the loan granted 28 April 2008. He claimed that on the basis of trust and reliance between himself and the respondents in the administration of the loan, they owed him a duty as guarantor of the loan.
In response to the claims filed by Ocean Chimo and Mr Howell, the respondents filed notices of application for summary judgment in both claims on 5 November 2013. They sought orders requesting that summary judgment be entered against Ocean Chimo and Mr Howell, respectively, in their favour and costs. The sole ground of those applications was that Ocean Chimo and Mr Howell had no real prospect of succeeding in their respective claims against the respondents.
There were several issues raised on the pleadings and affidavits filed in support of and in opposition to the claims and the applications for summary judgment. However, in an effort not to make these reasons for judgment longer than they appear that they may ultimately be, I intend only to refer to, highlight and comment on those aspects that appear relevant and important for the purposes of the determination of the applications, and consequently, the appeal.
In the claim by Ocean Chimo and that of Mr Howell, the contention was that at no time in June or October 2008 was Ocean Chimo's payment on principal or interest outstanding. In fact, the increased charges of interest stated in the pleadings were done in breach of the loan documents and without any notification to Ocean Chimo or Mr Howell as guarantor. There were particular provisions in the loan agreement requiring the lender banks to advise Ocean Chimo of any increase or modification to the interest rates. Ocean Chimo claimed the loan had been disbursed late (in three tranches on 15, 16 and 22 May 2008), in breach of the loan agreement, and excessive charges had been debited from Ocean Chimo's account. The lender banks, they contended, had failed to comply with the strict terms of the loan agreements which was agreed in good faith. To the contrary, the lender banks had acted unlawfully and arbitrarily and sought to profit from their actions undertaken in bad faith.
Ocean Chimo and Mr Howell claimed that the respondents had negligently and fraudulently conducted the affairs of the lender banks in relation to Ocean Chimo's loan. The respondents had never given Ocean Chimo or Mr Howell an account of how the sums paid on the loan had been applied and so the parties were uncertain as to whether the sums had been applied to interest or principal.
Complaints were made regarding the interest rate on the loan. The interest rate on the loan was based on the London Interbank Offer Rate (LIBOR) of 2.64% plus a fixed spread of 4.5%, thus making the overall interest rate payable on the loan 7.14% per annum. Without consultation or notification, immediately after the commitment letter was issued and the loan was disbursed, the interest rate was increased to 7.39% in May 2008, and then further increased to 9.25% in December 2008. This resulted in Ocean Chimo paying a sum of US$458,000.00, well above the contracted rate of US$351,530.00 in respect of principal and interest. The excessive charging of the interest rate negatively affected Ocean Chimo's bank balances and forced it to be in default.
Ocean Chimo further contended that after two years of charging the excessive interest rate, those rates were subsequently reversed, but the lender banks continued to charge the default rate on the alleged arrears. The lender banks knew that LIBOR had not increased in 2008 and that those rates had fallen between January to May 2010. However, the lender banks did not respond to Ocean Chimo's letters enquiring about the increased rates being applied. It was also contended that the loan agreement did not provide for a weighted average interest rate which was at that time being used by the lender banks.
Ocean Chimo wrote to RBTT Bank (Jamaica) Limited requesting a moratorium on the payment of the principal due to the global economic crisis, and the negative effect it had had on the hotel and tourism industry. Although the lender banks were offering concessions to other customers, the request for similar concessions to be made to Ocean Chimo was refused.
Due to the increased interest rates and the position adopted by the lender banks, Ocean Chimo sought refinancing from another financial institution, the National Commercial Bank Jamaica Limited (NCB). However, when the negotiations were well advanced toward securing the financing, Ocean Chimo claimed that the respondents communicated unsolicited information to NCB, not relevant to the financing, which caused NCB to terminate the discussions with Ocean Chimo.
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