Island Life Insurance Company Ltd v Huntley Manhertz and another [Consolidated Suits]
| Jurisdiction | Jamaica |
| Judge | SMITH, J.A: , HARRISON, J.A.: , SMITH, J.A. (Ag). , SMITH, J.A. |
| Judgment Date | 28 September 2008 |
| Neutral Citation | JM 2008 CA 46 |
| Judgment citation (vLex) | [2008] 6 JJC 2701 |
| Court | Court of Appeal (Jamaica) |
| Date | 28 September 2008 |
LOANS - Non-payment of sums - Statutory Notices - Injunction to restrain power of sale
I have had the benefit of reading in draft the judgment of my colleague, G. Smith J.A. (Ag), and I agree with her conclusion and reasoning. However, I wish to make a small contribution.
In January 1995 the appellants borrowed $4.5 million from the respondent on the security of a mortgage over their property situate at 12 Gordon Town Road, Kingston 6 (the property). The Instrument of Mortgage dated 8 th January 1995 contained the usual power of sale and required repayment of the loan by monthly installments of $168,447.86 over a period of five years. The loan was disbursed in three tranches, the last of which was made on the 27 th January 1995. The installments were to be paid on the first day of each month. The first of such installments became payable on the 1 st February 1995. The appellants failed to pay the installments as agreed and, on occasion, their cheques tendered in payment were dishonoured by the bank. The respondent wrote several letters to the appellants about the arrears and demanded settlement. The first appellant made various proposals to pay but these were never honoured. After a prolonged period of non-payment, the respondent wrote to the appellants, demanding that the outstanding arrears be settled by a specific time, failing which the respondent would commence the exercise of its power of sale. The appellants failed to respond. Consequently, a Statutory Notice dated the 15 th May 1998 was issued. The sum owing at that time was $ 7,953,690.64 comprising arrears plus interest. The property was advertised and, on the 9 th July 1998, put up for public auction. No bids were received at the auction.
On October 12, 1998 the first appellant wrote to the respondent seeking confirmation of an agreement for the respondent to accept $3,600,000.00 in full and final settlement of the debt. By letter dated November 3, 1998 the respondent agreed to accept $3,600,000.00 in full and final settlement of the debt of $7,953,590.64 which was claimed in the Statutory Notice. The first appellant had indicated that he had found a purchaser for the property. By letter dated November 25, 1998 the respondent requested from the appellants' Attorney-at-law a copy of the signed Agreement for Sale and their undertaking to pay to the respondent the sum of $3.6 million. The request was never granted and the sum of $3.6 million was never paid. Consequently, the respondent issued another Statutory Notice dated February 11, 1999 demanding the sum of $8,691,593.49 from the appellants. The demand was not met. On May 4, 1999, the respondent by letter, demanded $8,856,495.12 from the appellants and threatened legal action. This demand was followed by a third Statutory Notice dated June 10, 1999. The debt which had risen to $9,717,766.88 remained unpaid in spite of the many demands. The property was duly advertised for sale by public auction. A second public auction was held on August 12, 1999. A bid of $5,500,000.00 was to no avail because of the bidder's inability to provide the deposits.
On September 20, 1999 the appellant's Attorneys at law wrote to the respondent and apologized on behalf of the appellants for their inability to act on the negotiated agreement. By this letter the appellants made a new offer of $5,500,000.00 in full and final settlement. This offer was rejected by the respondent and the appellants were informed that the debt was $14,707,764.00 at the time-(see letter dated September 29, 1999).
A valuation report dated September 20, 1999 was obtained from Easton Douglas and Company. The property was valued at $8,700,000.00 with a reserve price of $6,900,000.00. By an undated letter the respondent received an offer from one Mr. Clement Stevens to purchase the property for $ 6,200,000.00.
On September 22, 1999, the appellants obtained an injunction restraining the respondent from selling the property for a period of ten days. The injunction was extended to October 12, 1999. On October 21, 1999 Mr. Clement Stephens increased his offer to $7,000,000.00. By letter dated October 28, 1999 the respondent's Attorney-at- Law advised the appellants' Attorneys that the respondent intended to exercise its rights as mortgagee.
The Attorneys-at-Law for the parties made proposals and counter proposals in relation to the settlement of the debt. During this time offers and revised offers were made to the respondent by and on behalf of Mr. Stephens. Ultimately, an offer of $9,500,000.00 from Mr. Stephens was accepted by the respondent subject to contract. The property was sold to Mr. Stephens on March 21, 2000.
On September 12, 2000 the respondent's Attorneys-at-Law wrote to the appellants Attorneys, requesting that they settle the balance of $9,036,732.18, the amount which remained outstanding together with interest.
On September 25, 2000 the respondent filed a suit against the appellants to recover the sum of $8,037,437.18.
On November 29, 2000, the appellants countered by filing a suit against the respondent claiming the sum of $5,500,000.00, that is the difference between $15,000,000 (which they claimed was the market value of the property) and $9,500,000.00, the sum for which the property was sold.
The suit went before Sinclair- Haynes J (Ag.) (as she then was). The learned judge heard both claims together. After a trial which lasted some 14 days, in a well reasoned judgment, the learned trial judge gave judgment for the respondent in the sum of $7,740,956.70 with costs. This appeal is against the decision of the judge.
Grounds of Appeal
The appellants filed some fourteen grounds of appeal. It seems to me that these grounds embrace four main issues. These issues concern:
I will confine my contribution to the issues concerning the $3.6M settlement agreement.
In The Court Below
-
1. The sale of the property pursuant to Power of Sale-grounds 1,2 and 3.
-
2. Waiver by virtue of the $3.6 million agreement-grounds 4 and 5.
-
3. The compounding of interest-pursuant to Clause 3 (b) of the Mortgage Instrument.
-
4. Quantum of damages
The appellants in their further Amended Defence to Claim No. CL 2000/ 1–072 and in their Amended Statement of Claim in Claim CL 2001/M-225 averred, inter alia, that the respondent by letter dated November 3, 1998 agreed to accept $3.6 million in full and final settlement of the mortgage debt, thereby waiving the terms of payment under the mortgage. In the former, the appellants stated that, in reliance on such waiver, they altered their position to their detriment.
The learned trial judge found that the respondent's agreement to accept $ 3.6 million in full and final settlement of the debt did not amount to accord and satisfaction, as the respondent received no additional benefit by way of consideration. She applied the rule in Pinnels case which was approved by the House of Lords in Foakes v Beer (1884) A.C. 605. The learned judge relied on a statement of Danckwert L.J. in D & C Builders Ltd. v Rees (1966) 2 Q.B. 617 to the effect that Foakes v Beer has settled the rule of law that part payment of a debt cannot be a satisfaction of the debt unless there is some benefit to the creditor added so there is an accord and satisfaction.
The English Court of Appeal has recently confirmed the rule in Foakes v Beer - see Re Selectmore (1995) 1 WLR 474, (1995) 2 All ER 534 and Ferguson v Davis (1997) 1 All ER. 315.
Having found that the respondent's agreement to accept the $3.6 million in full settlement was not enforceable on the basis that the appellants did not provide any consideration, the learned judge proceeded to consider Mrs. Taylor- Wright's submissions on the equitable doctrine of waiver.
In considering the issue of waiver, one of the questions the learned judge posed was:
"Did the Manhertzs in reliance on the agreement act to their detriment by not paying the installments and focusing instead on obtaining approval to effect Strata Titles, constructing parking lot and entering into contract and final sale agreement?"
The learned judge noted that the 1 st appellant in his witness statement had stated that the respondent accepted his offer of $3.6 million because of his earlier proposal to convert the premises into Strata Shops. She preferred Miss Donna Stephenson's evidence, which refuted the claim that the respondent's acceptance was premised on the appellants obtaining Strata Titles. On the balance of probabilities the learned judge found that the respondent did not agree to accept the $3.6 million because of the 1st appellants' proposal to convert the premises into Strata Shops. The learned judge went on to say:
"Assuming the Manhertzs were indeed given the assurance by Island Life that it could proceed to expand the building, the question is whether the Manhertzs acted to their detriment by relying on Island Life's waiver."
After considering the evidence she concluded that the appellants had not established that they had suffered detriment by relying on the respondent's waiver.
On Appeal
The relevant grounds are 4 and 5:
Ground 4
The learned trial judge erred in law when she treated detriment as the all-important factor in assessing the reliance of the appellants on the respondents' waiver
Ground 5
The learned trial judge erred in law when she failed to recognize that the impact of the waiver on the original loan agreement was...
To continue reading
Request your trial
-
Caribbean Cement Company Ltd v Freight Management Ltd
...the judgment), thereby falling into error. 19 Counsel argued further that the learned judge had misapplied the case of Manhertz & Manhertz v Island Life Insurance Co. Ltd SCCA No 24/2006 delivered 27 June 2008 (paras 137 to 139 of the judgment) in determining that promissory estoppel could ......
-
Arc Systems Ltd v Atradius Credit Insurance NV
...collateral agreement would not displace the respondent's right under the Bills of Exchange Act. 18 Citing Huntley Manhertz and Yvonne P Manhertz v Island Life Insurance Company, SCCA No 24/2006, delivered 27 June 2008, counsel argued that there is nothing in the defence to show that paying ......