Fletcher and Company Ltd v Billy Craig Investments Ltd and Another

• Jurisdiction: Jamaica
• Judge: McDonald-Bishop, J
• Judgment Date: 24 September 2012
• Neutral Citation: [2012] JMSC Civ 128
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2459 OF 2009
• Date: 24 September 2012

Between:

Fletcher & Company Limited

Claimant

and

Billy Craig Investments Limited

1st Defendant

and

Scotia Investments Limited

2nd Defendant

[2012] JMSC Civ 128

CLAIM NO. 2459 OF 2009

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

Civil Procedure — Application for summary judgment — Whether claim res judicata — Application of res judicata to default judgments — Cause of action estoppel — Issue estoppel — Henderson v Henderson estoppel — Abuse of process — The Civil Procedure Rules (CPR) r. 15.2 (a).

Ms. Carol Davis for the claimant/ respondent

Michael Hylton Q.C. and Sundiata Gibbs instructed by Duwayne Lawrence of Michael Hylton & Associates for the defendants/ applicants

IN CHAMBERS

McDonald-Bishop, J

1 This concerns an application for summary judgment brought by Billy Craig Investments Limited, first defendant, and Scotia Investments Limited, second defendant, against Fletcher and Company Limited, the claimant, pursuant to rule 15.2 (a) of the Civil Procedure Rules, 2002 (the CPR).

2 The sole ground on which the application for summary judgment is based is that the claim is res judicata by reason of the judgment of Sykes, J. entered on 12 July 2006 in claim number 2005HCV05018 ( Billy Craig Investments Limited v. Fletcher & Company Limited ). It is argued that on the basis of the doctrine of res judicata, the claimant has no real prospect of succeeding on the claim and, as such, it is appropriate for summary judgment to be entered in favour of the defendants. The application, of course, is strenuously contested by the claimant.

The background

3 The claimant is a company duly incorporated under the laws of Jamaica with its registered office located in Montego Bay, St. James. It was, at all material times, the registered proprietor of lands that (for our purposes) include lots H25 and H26, Bay Road, Montego Bay, St. James, registered at Volume 1070 Folio 141 and Volume 1070 Folio 142, respectively, of the Register Book of Titles (hereinafter will be called the ‘mortgaged property’). David and Alice Fletcher were its shareholders.

4 In or around October 1995, Robert Joseph, Clyve Lazarus and Constantine Nicholas entered into an agreement to purchase from David Fletcher and Alice Fletcher all the shares held by them in the claimant in the sum of US$1,500,000.00. The sum of US$750,000.00 was paid and the balance purchase price of US$750,000.00 was made payable upon completion.

5 On 10 November 1995, the claimant entered into a mortgage numbered 908314 with Sportula, a company duly incorporated in the Cayman Islands, to secure a loan for the balance of the purchase price with interest. This loan was secured by mortgage by way of guarantee registered against the mortgaged property. The purchasers of the shares were the principal borrowers and the claimant was the guarantor.

6 This mortgage was subsequently transferred from Sportula to the first defendant by transfer no. 966097 registered on 18 February 1997. The first defendant is an Industrial and Provident Society duly registered under the Industrial and Provident Society Act with its registered office also located in Montego Bay. It has been in receivership since 2004.

7 The first defendant was put in receivership by Scotia DBG Investments Limited (formerly operating as Dehring Bunting & Golding Limited) but now known as Scotia Investments Limited, the second defendant, which is a company also duly incorporated under the laws of Jamaica with its registered office located at Holborn Road, Kingston. The first defendant is a subsidiary of the second defendant.

8 In or about 2003, when Dehring, Bunting & Golding Limited took over the management of the first defendant, it conducted the business with respect to the claimant's mortgage on behalf of the first defendant. The second defendant has continued to do the same even with the first defendant being in receivership.

9 On 4 November 2005, following the default of the claimant in its repayment of the mortgage sum, the first defendant, in exercising its power as mortgagee, brought the claim No. 2005HCV05018 against the claimant by way of fixed date claim form for recovery of possession of the mortgaged property. The claim was supported by the affidavit evidence of Mr. Peter Bunting, who, at the time, was a member of the Committee of Management of the first defendant.

10 Mr. Bunting deposed in his supporting affidavit that, among other things, the first defendant claimed as mortgagee and transferee of the benefit of the mortgage of 10 November 1995 made between the claimant and Sportula. He exhibited the mortgage, highlighted some of its relevant clauses and stated several grounds on which the first defendant was entitled to possession of the mortgaged property to include the default of the claimant in repaying the loan and the repeated demands of the first defendant for payment.

11 On 12 July 2006, Sykes J. made the order upon the fixed date claim form which was stated then as an amended order to one issued previously on 26 June 2006. The order stated that the claimant (the defendant then) should within 60 days of the service of the order deliver up to the first defendant (the claimant then) possession of the mortgaged property. Costs were also awarded to the first defendant.

12 This judgment was, from all indication on our records, in the nature of a default judgment, in that, the claimant had failed to file an acknowledgment of service and defence or affidavits in response to the claim and was absent at the hearing when the judgment was entered. However, there was no application made by the claimant to set aside that judgment as one given in its absence and neither did it file an appeal in respect of it.

13 By an amended claim form filed on 18 June 2009, being three years or so after the order for recovery of possession was made, the claimant filed a claim against the first defendants. On 30 May 2011, a further amended claim form was filed naming the second defendant as a co-defendant following an order of the court, on application made, that the second defendant should be joined. It is this claim that is the subject matter of these proceedings for summary judgment.

14 In this claim, the claimant claims against both defendants ‘for wrongfully collecting the claimant's moneys pursuant to a mortgage which is illegal and /or void,’ and/or for breach of trust and for conspiracy to injure. It seeks, among other things, by way of relief: (1) an injunction to prevent the sale of the mortgaged property; (2) a declaration that the mortgage endorsed in respect of the said property is ‘void, illegal and/or unenforceable’;(3) In the alternative, an order that an account be taken of what amount, if any, is due by the claimant to the defendants; (4) an order that the defendants cease managing or dealing with the assets of the claimant; and (5) damages for breach of trust/and or for conspiracy to injure.

15 As can be discerned from the pleadings, the main thrust of the claimant's contention that forms the foundation of its claim against the defendants is that the mortgage that was transferred to the first defendant, and on which it obtained judgment for recovery of possession in 2006, was void for illegality and, thus, unenforceable.

16 The claimant's contention, in substantiating this point, is that the mortgage was granted for the purpose of assisting with the purchase of the claimant's share which is in contravention of section 54 of the Companies Act, 1965 which was the operative statute at the time of the transaction. The argument advanced is that any transaction which is in breach of section 54 of the Companies Act is illegal and void and is, as such, unenforceable against the original mortgagor and any subsequent purchaser.

The application

17 It is against this background of the claimant's averments in its claim that the defendants are contending that given that the same mortgage had formed the basis of the previous claim on which judgment was entered by Sykes, J. in 2006 in the first defendant's favour for recovery of possession of the mortgaged property, the claim is res judicata and so without a real prospect of success. As such, summary judgment ought to be granted for the defendants on the claim.

18 The defendants in the application, then, state:

‘The issues which the Defendant proposes the Court should deal with at the hearing are:

• 1. Whether the claim is res judicata .

• 2. Whether the Claimant is entitled to an account under the mortgage dated November 10, 2005.

• 3. Whether in all the circumstances, the Claimant has a real prospect of succeeding on the claim.’

The court's power to grant summary judgment

19 It is acknowledged that pursuant to the CPR, rule 15.2 (a), the court has the power to grant summary judgment on a claim on the basis that the claim has no real prospect of succeeding. The exercise of the court's power under this rule is, of course, subject to the overriding objective contained in part 1 to deal with the case justly which would be the same as doing justice between the parties.

20 The court's treatment of applications for summary judgment under the CPR has been the subject of much judicial deliberation both within and outside this jurisdiction leading to what can now be accepted as well-defined and settled principles of law governing the issue. I will venture to say for present purposes that the principles of law governing the area are, by now, so well-established so much so that they can be said to be, practically, trite. For that reason, I am of the view that it would not be absolutely necessary for me to set out in any great detail the case law on the subject.

21 I have felt it necessary, however, to briefly highlight some of the core principles that have been elicited from some of the leading authorities on the subject...