Island Life Insurance Company Ltd v Huntley Manhertz and another [Consolidated Suits]
| Jurisdiction | Jamaica |
| Judge | Sinclair-Haynes J (Ag.) |
| Judgment Date | 27 September 2006 |
| Judgment citation (vLex) | [2006] 3 JJC 1702 |
| Court | Supreme Court (Jamaica) |
| Date | 27 September 2006 |
| Docket Number | CLAIM NO. C. L. 2000/I-072 |
REAL PROPERTY -
Dr. Huntley Manhertz and Mrs. Yvonne Manhertz (mortgagors) obtained a loan of $4,500,000.00 from Island Life (mortgagees) in January 1995. The loan was secured by property situated at 12 Gordon Town Road, Kingston 6 and was to be repaid in five years by monthly installments of $168,447.86. Payments were to be made the first day of each month. The Manhertzs failed to pay the installments as agreed and at times when payments were made their cheques were dishonoured. Island Life wrote several letters to them about the arrears and requested settlement. The Manhertzs, in response to these letters made various proposals to pay which did not materialize. Two letters of demand were sent in January 1998. They failed to respond. Consequently, a statutory notice was sent to them in May 1998 for the sum of $7,953,690.64.
Ms. Donna Marie Stephenson, on behalf of Island Life, instructed D. C. Tavares & Finson Realty Company Limited to sell the mortgaged property by public auction. The property was advertised on five occasions in The Daily Gleaner and a public auction was held on July 9, 1998. No bids were received at that auction.
On October 12, 1998, Dr. Manhertz wrote to Island Life seeking confirmation whether it would accept the sum of $3,600,000.00 in full and final settlement. By letter dated November 3, 1998 Island Life agreed to accept $3,600,000.00 instead of $7,953,590.64 which was claimed in the statutory notice. Dr. Manhertz informed Island Life that he had found a purchaser for the property. By letter dated 25 th November 1998 Island Life requested from the Manhertzs' attorney-at-law a copy of the signed agreement and their undertaking to pay Island Life the sum of $3.6 million. The request was never granted and the sum of $3,600,000.00 was never paid. Consequently, a further statutory notice demanding the sum of $8,691,593.49 dated February 11, 1999 was issued to the Manhertzs. Island Life was still not paid and on May 4, 1999 Island Life wrote to the Manhertzs demanding $8,856,495.22 and threatened legal action.
On June 10, 1999 another statutory notice was issued. The sum Island Life sought to recover was $9,717,766.88. The sum was not paid. As a result it instructed D C Tavares & Finson Realty Company Limited to advertise the premises for sale by public auction. The property was duly advertised in The Daily Gleaner on four occasions.
A second public auction was held on the 12 August 1999. One Mr. McFarlane made a bid of $5,500,000.00 but he was unable to provide the deposit. The sale therefore failed.
On the 20 th September 1999 the defendant's attorneys, Mesdames Taylor, Deacon & James wrote to Island Life, apologized on behalf of the Manhertzs for their inability to act on the negotiated arrangements and offered to pay the sum $5,500,000.00 instead of the $3,600,000.00 previously offered. The letter indicated the manner in which they proposed to make the payments. This offer was rejected by Island Life which informed them that the debt was then $14,707,764.60. Island Life then engaged the services of Easton Douglas & Company to prepare a valuation report. A report dated September 30, 1999 was obtained from Easton Douglas & Company. The property was valued at $8,700,000.00 with a reserve price of $6,960,000.00.
Island Life received an offer from Mr. Clement Stevens to purchase the property for $6,200,000.00.
On September 22, 1999 the Manhertzs' obtained an interim injunction to stop Island Life from selling the property. The injunction was extended to October 12, 1999. On October 21, 1999, Mr. Stevens increased his offer from $6,200,000.00 to $7,000,000.00. On October 28, 1999 Island Life's attorneys, Livingston, Alexander & Levy wrote to Mesdames Taylor, Deacon & James and advised them that Island Life would exercise its rights as mortgagee.
Dr. and Mrs. Manhertz wrote to Livingston, Alexander & Levy on October 29, 1999 and offered $6,000,000.00 to settle the debt. The letter informed that the sum of $2,000,000.00 was available. This sum was however, never received by Island Life.
On November 16, 1999 Livingston, Alexander & Levy responded to the Manhertzs and indicated to them that Island Life would accept $10,000,000.00 in full and final settlement.
On November 16, 1999, Mesdames Taylor-Wright & Company then representing the Manhertzs responded to Island Life with a counter offer of $7,000,000.00 which their client promised to pay within 30 days. By letter dated December 21, 1999 Island Life rejected the offer.
Mesdames Taylor-Wright & Company, on December 31, 1999 wrote to Livingston Alexander & Levy and offered to pay $10,000,000.00 over a period of six months.
On February 8, 2000 Island Life received an offer from Mr. Clement Stevens for $8,000,000.00. On February 9, 2000, Dr. Manhertz wrote the president of Island Life, beseeched him not to sell to Mr. Stevens and reminded him of the Strata Plan which was sent to him. He also informed him that he was in the process of applying for Strata Title which would increase the value of the property.
On February 14, 2000, Island Life wrote to Dunn Cox (Mr. Stevens' attorney) and accepted Mr. Stevens' offer of $8,000,000.00. On the said day the Manhertzs' attorney wrote to Island Life and informed it that they had a purchaser, Mr. Barrington Stennett who was offering $8,000,000.00. An enquiry was made as to whether the property was advertised for sale at private treaty. Legal action was threatened if the property was sold at an inordinately low price.
On February 15, Mr. Stevens increased his offer to $9,000.000.00 and on March 16, 2000 he increased it to $9,500,000.00
On the 19 th February 2000, Livingston Alexander & Levy wrote to Mesdames Taylor Wright & Company and requested the following:
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a. A copy of the approval to issue Strata Title;
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b. a copy of the Strata Title;
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c. copies of the agreement of sale between the Manhertzs and the purchasers;
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d. the number of shops which were ready for sale and the sale price. In response to these requests only the names of three persons were supplied to
Island Life's attorneys on the 21 st February 2000.
The property was sold to Mr. Stevens on the 3 rd March 2000 for the sum of $9.500,000.00.
On May 8, 2000, Island Life wrote to Mr. Stennett's attorney and advised him that his offer of $8,000,000.00 was not acceptable.
Island Life's case
Island Life's claim is that as at 1 st October 1999, the Manhertzs were in arrears to Island Life in the sum of $14,707,764.60 being principal and interest. Upon the sale of the property for $9,500,000.00, the amount which remains outstanding is $8,037,437.18. This sum includes outstanding water rates, property taxes, auction expenses, one-half stamp duty, one-half registration fee plus interest at 36% for 19 days.
The Manhertzs' case
The Manhertzs contend that Island Life represented to them that it would accept $3,600,000.00 in full and final settlement of the debt. In reliance of its representation they altered their positions and acted to their detriment by pursuing the approval of an application to effect Strata Title, concluded pre-contract agreements to enter into formal sale agreements with prospective purchasers and collected deposits totalling $3,150,050.00 pursuant to the pre-contract agreements. Island Life, has sold the property to Mr. Clement Stevens thereby exposing them to the threat of legal action. Island Life has refused to disclose the names of the purchasers and the conditions of the offer it received thus preventing them from making a similar offer. It failed to obey an order of the court to disclose the sale price. Strata approval for the property had been obtained and the market value was about $24,000,000.00, yet Island Life sold it for $9,500,000.00.
The purchaser was not an independent purchaser. He had a close relationship with Island Life and was a relative of a senior business executive in the banking industry. Island Life failed to contact three purchasers whose names where given to it and who were ready, willing and able to purchase the shops situated on the mortgaged property.
Island Life failed to render a true account of the proceeds of sale and failed to pay them the balance of the purchase price less the debt of $3,600,000.00.
The contract of sale between Mr. Stevens and was not bona fide. It was achieved by impropriety, fraud and or collusion between the parties to sell at an undervalue.
The Manhertzs' claim is for the sum of $5,500,000.00 which is the difference between $15,000,000.00 they claimed to be the market value and $9,5000,000.00, the sum for which the property was sold. Interest is also claimed at a commercial rate.
Both claims have been consolidated.
First Issue: Whether Island Life waived its right to claim a sum in excess of $3.6 million
I am thankful to Counsel for their thorough research of this matter and for the numerous authorities presented to the court. My failure to refer to some of these authorities is simply with a view of shortening my decision. No disrespect is intended.
The first issue to be determined is whether Island Life's acceptance of the Manhertzs' offer to pay the sum of $3,600,000.00 binds Island Life. Has Island Life waived its right to claim a sum in excess of $3,600,000.00? Is it estopped from claiming the full debt?
Mr. Ransford Braham argues that the insurance company expected to...
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