Jade Overseas Holdings Ltd v Palmyra Properties Ltd and Others
| Jurisdiction | Jamaica |
| Judge | Mangatal J |
| Judgment Date | 29 November 2013 |
| Court | Supreme Court (Jamaica) |
| Docket Number | CLAIM NO. 2013 CD00142 |
| Date | 29 November 2013 |
[2013] JMCC Comm. 17
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE COMMERCIAL DIVISION
CLAIM NO. 2013 CD00142
and
and
Mrs. Caroline Hay instructed by Grant Stewart Phillips & Co., Attorneys-at-law for the Claimant .
Mr. Kwame Gordon , and Ms. Nadine Amos , instructed by Samuda & Johnson, Attorneys-at-Law for the Defendants .
INTERLOCUTORY INJUNCTION — COURSE LIKELY TO CAUSE THE LEAST IRREMEDIABLE PREJUDICE — NEED FOR COURT TO ENGAGE IN ASSESSMENT OF STRENGTH OF PARTIES' CASES — CASE INVOLVING MAINLY CONSTRUCTION OF AGREEMENT/WRITTEN INSTRUMENTS/POINTS OF LAW — WHETHER COURT CAN FEEL HIGH DEGREE OF ASSURANCE THAT AT TRIAL WOULD APPEAR INJUNCTION RIGHTLY GRANTED — WHETHER CLAIMANT GUILTY OF DELAY SECURITIES — FIXED OR FLOATING CHARGE — DEBENTURE — RESTRICTIVE CLAUSES IN DEBENTURE — PRIORITY OF CHARGES — WHETHER MANAGEMENT AGREEMENT VOID AS MAINTENANCE OR CHAMPERTY — WHETHER MANAGEMENT AGREEMENT CONSTITUTES SALE OR DISPOSAL OF ASSETS IN THE ORDINARY COURSE OF BUSINESS — WHETHER PRIOR WRITTEN OR OTHER CONSENT OF DEBENTURE-HOLDERS REQUIRED FOR ASSIGNMENT UNDER MANAGEMENT AGREEMENT-WHETHER ENTRY INTO MANAGEMENT AGREEMENT TRIGGERED AUTOMATIC CRYSTALISATION OF FLOATING CHARGE INTO FIXED CHARGE
This claim was filed on the 2 nd of September 2013. It is a very interesting and novel case, involving a wide range of legal issues, including the not-so-common public policy considerations of champerty and maintenance, the law of securities, debentures, fixed and floating charges, and equitable charges. It calls for a consideration of the meaning of the phrase ‘in the ordinary course of business’ in the relevant debentures and requires the construction of a number of Instruments. I thank all Counsel on both sides for the high level of preparation. This litigation comes at a time just before Jamaica, (from all indications) expects to pass the much talked-about and somewhat controversial new legislation, ‘SIPP’, the Security Interests in Personal Property Act. That Act is expected to deal with security interests in personal property in a variety of ways. The present application is for an interlocutory injunction.
The Claimant Jade Overseas Holdings Limited (‘Jade’) in its Particulars of Claim states that it is a limited liability company duly incorporated under the laws of the British Virgin Islands with registered office at Omar Hodge Building, Wickham Cay, Road Town, Tortola, British Virgin Islands.
The 1 st Defendant Palmyra Properties Limited (In Receivership) (‘PPL’) is a limited liability company duly incorporated under the laws of St. Lucia with registered office at Bourbon Street, P.O. Box 1695, Castries, St. Lucia.
The 2 nd Defendant Sanctuary Systems Limited (In Receivership) (‘SSL’) is a limited liability company duly incorporated under the laws of Jamaica with registered office at Rose Hall, Montego Bay in the Parish of Saint James.
The 3 rd Defendant Kenneth Tomlinson (‘the Receiver’) has been appointed Receiver in relation to PPL and SSL pursuant to Instruments of Debenture discussed later in this judgment. The Receiver was so appointed on the 23rd.day of July 2011.
The Palmyra Resort and Spa is a luxury condominium and hotel development (‘the Development’) situated on 12 acres at Rose Hall, Montego Bay in the Parish of Saint James. In broad terms, the Development consists(or was intended to consist) of 11 villas; 288 units of accommodation of varying sizes, divided between three 12 — storey towers, a 25,000 square foot spa, a 52,000 square foot clubhouse, two swimming pools and adjacent whirlpools. Integral to the Development was the operation of a hotel using a variety of these facilities and properties.
The Development was commenced on or about mid-2005 and is at least partially complete. The hotel on the Development opened in December 2010 and operated until November 2011. The management of the hotel was, principally, conducted by Solis Hotels and Resorts (Solis) a company with offices in Atlanta, Georgia in the United States of America with expertise in managing luxury 5 star hotels and resorts internationally. A number of units within the Development have been sold to third parties.
Mr. Kwang Sim, in an Affidavit filed September 9 th 2013, describes himself as an Officer of Jade. At paragraph 2 of his Affidavit Mr. Sim states that Jade is an associated company of PPL and SSL and he states that Jade, PPL and SSL have common officers. In a letter dated 29 March 2012, from Mishcon de Reya, Solicitors in London, England, who represent Jade, responding to a letter from Messrs. Samuda & Johnson, Attorneys-at-Law for the Defendants, it is stated that the sole shareholder of Jade is Resorts Properties Group Limited and the sole director is Servco Limited (BVI). Jade's Attorneys-at-Law on the 24 th of October 2013, served a Notice of Intention to refer to and rely upon the Affidavit of Robert Thomas Trotta, filed on 24 August 2009, in an earlier Suit, Claim No. 2009, HCV 04344. This Suit is referred to in greater detail below. In paragraphs 2, 10, 12 and 13 of that Affidavit, Mr. Trotta states as follows:
‘2. I am the Chairman of Resort Property Group (‘RPG’), a group of companies specializing in luxury resort development across the world. Both …. Claimants-…. SSL and….PPL –are part of RPG. ….SSL, a Jamaican company, is a wholly owned subsidiary of PPL, a St. Lucian company, and I confirm that I am authorised to act on behalf of both PPL and SSL by PPL's Directors and that I am duly authorised by both companies to make this Affidavit on their behalf .
…
10. I am the founder and Chairman of RPG. RPG was formed by me in 1983 and is at the forefront of the world's hotel and resort development industry. To date, RPG has, under my leadership, been responsible for the development of 13 different luxury resorts across Europe, the US and the Caribbean. RPG's resorts are renowned for their level of luxury, their environmental and cultural synergy, and their value for money
12. SSL, is part of the RPG Group of Companies and incorporated under the laws of Jamaica SSL was incorporated on 16 August 2005 with the specific purpose of carrying on the development of the Palmyra. It is a wholly owned subsidiary of PPL .
13. PPL, another of the RPG Group of Companies was incorporated in St. Lucia on 6 December 2004 and is the company within RPG responsible for contracting with buyers for the ‘construction contract’ element of the condo purchases. The land where the Palmyra is being developed is located in Jamaica and also owned by the RPG Group.’
On or about the 23 rd of April 2007, PPL, together with Palmyra Resort and Spa Limited (PRSL)as borrowers, entered into a Facility Agreement (‘ the Syndicate Loan Facility Agreement’) with National Commercial Bank Jamaica Limited (‘NCB’), RBC Royal Bank(Jamaica) Limited (formerly RBTT Bank Jamaica Limited, ‘RBC Jamaica’), RBC Royal Bank (Trinidad and Tobago) Limited (formerly RBTT Bank Limited, ‘RBC T&T’) and NCB Capital Markets Limited (‘NCBCM’) collectively referred to as ‘the Banks’. The sums to be advanced under the Syndicate Loan Agreement were for the purpose of the construction of the Development. The aggregate principal sum made available to PRSL and PPL under the Syndicated Loan Facility Agreement was eighty eight million United States Dollars (US$88,000,000.00), stated to be J$5,865,200,000.00 for stamp duty purposes.
As security in support of the Syndicate Loan Agreement, on or about the 23 rd of April 2007:
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i. PRSL executed a debenture in favour of NCB and RBC Jamaica (‘the PRSL Debenture’);
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ii. PPL executed a debenture in favour of NCB and RBC Jamaica (‘ the PPL Debenture’).
The PRSL and the PPL Debenture are collectively referred to as the 2007 Debentures.
Further loan agreements were negotiated and entered into between SSL together with Caribbean Green Power Systems Limited (CGPSL) as borrowers, and RBC Jamaica as lenders, in the period from June 2009. The sums to be advanced were for the purpose of the construction of the Development and the Power Plant. Sums (‘the Completion Loans’) were advanced under such agreements.
As security in support of the Completion Loans (or parts thereof), on or about 11 August 2009 CGPSL and SSL executed a debenture in favour of RBC (‘the 2009 Debenture’).
By virtue of Clause 5(a) of the 2007 Debentures, PPL and SSL agreed with the Banks to the creation of a charge as a continuing security ‘over all the undertakings and assets of the Borrower, both present and future.’ Clause 5, sub-paragraphs (a) and (b) provide as follows:
‘5) CHARGE
a) As security for the due and proper performance of the Borrower's obligations under the Facility Agreement and this Debenture and the Securities, including but not limited to the repayment of the Principal Sum and the payment of all interest thereon and all fees, charges, costs and expenses incurred by the Lender and NCBCML. In connection with or for preserving or enforcing this or any other security, and as security for the repayment of any other monies hereafter owing in respect of further advances under the Facility Agreement or otherwise owing to the Lender and NCBCML to or, for the account of the Borrower, and as security for any other liability or obligation(actual or contingent) now or hereafter owed by the Borrower to the Lender and NCBCML, the Borrower AS BENEFICIAL OWNER HEREBY CHARGES, and so that the charge is hereby created shall be a continuing security, over all of the undertaking and assets of...
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