Jamaica Edible Oils & Fats Company Ltd v M.S.A. Tire (Jamaica) Ltd and Jeane Lavan

• Jurisdiction: Jamaica
• Court: Court of Appeal (Jamaica)
• Judge: Morrison P
• Judgment Date: 23 April 2018
• Docket Number: SUPREME COURT CIVIL APPEAL NO 55/2015
• Date: 23 April 2018

Between

Jamaica Edible Oils & Fats Co. Ltd

Applicant

and

M.S.A. Tire (Jamaica) Limited

1 ^st Respondent

and

Jeane Lavan

2 ^nd Respondent

Morrison, P.

SUPREME COURT CIVIL APPEAL NO 55/2015

APPLICATION NO 15/2018

IN THE COURT OF APPEAL

Civil practice and procedure - Security for costs of appeal — Consideration of chances of success on appeal and risk of injustice from respondent's inability to meet order for costs.

Kwame Gordon and Ramon Clayton instructed by Samuda and Johnson for the applicant

Christopher Dunkley and Miss Tiffany Sinclair instructed by Phillipson Partners for the respondents

IN CHAMBERS

Morrison P

1 This is an application for security for costs of an appeal which was filed on 8 May 2015, and is now listed for hearing before the court on 16 July 2018. Having heard submissions from counsel on the application on 3 April 2018, I granted the application in the following terms on 23 April 2018:

• “1. The 1 ^st appellant/respondent shall give security for the respondent/applicant's costs of defending the appeal in the amount of $3,000,000.00 within 30 days of the date hereof.

• 2. The 1 ^st appellant/respondent shall pay the said sum of $3,000,000.00 into an interest bearing account in the name of Samuda & Johnson, attorneys-at-law, attorneys for and on behalf of the respondent/applicant, as security for the respondent/applicant's costs in defending this appeal, at a financial institution to be agreed on by the parties, such payment to be made within 30 days of the date hereof.

• 3. Costs to be costs in the appeal.”

2 These are my reasons for making these orders. For ease of reference, I will describe the respondent/applicant as ‘the applicant’ and the 1 ^st appellant/respondent as ‘the 1 ^st respondent’.

3 The background to the matter is as follows. By a lease made on 16 January 1998 (‘the head lease’), the Factories Corporation of Jamaica (‘FCJ’) leased a factory building situated Lot # 7, Naggo Head Industrial Estate in the parish of Saint Catherine (‘the premises’) to the applicant for a term of 15 years.

4 By clause 4(19) of the head lease, the applicant covenanted not to assign or underlet or part with possession of the premises without the previous written consent of FCJ (such consent not to be unreasonably withheld).

5 By an underlease made on 18 May 2006, the applicant leased the premises to the 1 ^st respondent. The term of the underlease was five years, commencing 15 June 2006 and expiring 30 September 2011, at a monthly rental of US$6,666.67, with provision for a 3% increase for each succeeding 12-month period commencing May 2008.

6 There is no evidence that the applicant either sought or obtained FCJ's prior written consent to the underlease, as clause 4(19) required it to do.

7 But, pursuant to the underlease, the 1 ^st respondent duly entered into possession of the premises, paying rent as agreed to the applicant. However, the 1 ^st respondent ceased making rental payments in March 2011.

8 On 10 April 2012, the applicant issued a fixed date claim form against the 1 ^st respondent claiming (i) an order for recovery of possession of the premises; (ii) outstanding rent from April 2011-September 2011, totalling US$52,642.16; and (iii) mesne profits at the agreed rental rate for the unlawful occupation of the premises for the months of October 2011-February 2012, totalling US$44,082.45. The applicant also sought orders for payment of mesne profits at the agreed rental rate until the respondent vacated the premises, plus interest.

9 On 13 December 2012, McDonald-Bishop J (as she then was) ordered the 1 ^st respondent to give up possession of the premises on or before 14 March 2013.

10 Between 28 January 2013 and 25 February 2013, the applicant obtained a series of freezing orders against the respondent, the last such being an order made by King J after an inter partes hearing on 25 February 2013. The upshot of this order was that the 1 ^st respondent was restrained from (i) dealing with funds in its accounts with the National Commercial Bank Portmore Branch; (ii) disposing of, transferring, charging or diminishing the value of, or in any way dealing with, assets in its name wheresoever they may be situate in the jurisdiction up to the value of US$176,000.00; and (iii) taking out of the jurisdiction machinery and equipment used by it in the operation of its business until 11 June 2013, or until further order.

11 The freezing order was subsequently extended more than once on the applicant's application and remained in force right up to the end of the trial.

12 On 27 June 2013, the applicant amended the fixed date claim form to update the mesne profits claim to February 2013.

13 The 1 ^st respondent filed its defence to the claim on 5 August 2013, taking took two points. First, that the claim for rent in respect of the premises was unenforceable by virtue of the fact that the applicant was in breach of clause 4(19) of the head lease; and, second, that the applicant, having admitted that it was itself a lessee of the premises, was not entitled to claim against the 1 ^st respondent for mesne profits in respect of those premises.

14 In evidence at the trial of the fixed date claim form was a copy of a letter from FCJ to the applicant dated 12 June 2007. The letter confirmed that prior written approval had neither been sought nor obtained by the applicant in respect of the underlease to the respondent:

“At the time of our visit, it was also observed that there was an illegal occupant in the building purporting to be a subtenant of your company, conducting tyre retreading operations on the property. We regard that occupant as being in unlawful possession of our property since you had not received written consent from FCJ to sublet the property, in breach of Clause 19 of the Lease Agreement. In addition, the occupant was seen conducting the tyre retreading operations in breach of Clause 25 of the Lease Agreement prohibiting the use of combustible and inflammable substances on the property.

In view of the foregoing breaches of the lease in allowing an illegal occupant onto the property to conduct activities using prohibitive [sic] substances, you are hereby given Notice to take all necessary steps to correct the breaches and have the illegal occupant removed from the premises within thirty (30) days of the date hereof. Failure to do so will result in Notice being served on you to Quit and vacate the premises by August 31, 2007.” (Emphasis as in the original)

15 In a judgment given on 27 March 2015, Evan Brown J found for the applicant. He considered that although the underlease was entered into in breach of clause 4(19) of the head lease, it was nevertheless valid and effectual: “where such a breach occurs, it avails remedies to the landlord rather than invalidate [sic] the lease” (paragraph [26]). It therefore followed from this that the applicant was entitled to recover the unpaid rent for the duration of the underlease. As regards the claim for mesne profits, the judge said that “[w]hilst I am guided by the view that a landlord in such a tenancy cannot sue for mesne profits, the landlord may nonetheless take out an action against the tenant for ‘the use and occupation of the premises’”.

16 The judge accordingly ordered the 1 ^st respondent to pay to the applicant (i) outstanding rent in the sum of $4,572,225.76; and (ii) mesne profits in the sum of $3,791,090.70, plus interest at the commercial rate on the sums awarded. As regards the freezing order, which he had earlier extended to the determination of the substantive matter, the judge ordered that it should remain in effect for a period of 28 days from the date of his judgment.

17 In its notice and grounds of appeal filed on 8 May 2015, the 1 ^st respondent challenged the judge's decision on a total of 16 grounds covering a wide area of contention. The grounds of appeal are as follows:

“16. The Learned Judge in Chambers erred in failing to hold or at all that the Claim as pleaded was one in contract, firstly for rental and subsequently, for mesne profits beyond the period of that contract.

17. The Learned Judge in Chambers erred in failing to consider or at all that as a Court of Pleadings, and there being no Part 20 CPR application to amend, the Claimant was bound by its pleadings and not the case of tenancy by estoppel it argued at trial.

18. The Learned Judge in Chambers erred in failing to consider or at all that as a matter of contract, the Claimant was obliged to pay rent to its Lessor, Factories Corporation, without breaching the Lessor's prohibition to sublet, outside written prior permission per clause 4(19) of its lease.

19. The Learned Judge in Chambers erred in finding that the Claimant's lease with Factories Corporation of Jamaica was a ‘Head Lease’ to an ‘Underlease’ where the lease at Clause 4.19 strictly prohibited any such agreement in the absence of prior written consent.

20. The Learned Judge in Chambers erred in failing to consider or at all that the Claimant's claim required the finding that a valid underlease existed, which in turn required the suppression of Factories' Corporation notice of June 12, 2007 to this Honourable Court, eventually the subject of a Notice to Produce dated March 6, 2014.

21. The Learned Judge in Chambers erred in failing to consider or at all that the suppression of the Lessor's notice of complaint to this Honourable Court further barred the Claimant from seeking relief of tenancy by estoppel.

22. The Learned Judge in Chambers erred in failing to consider or at all the commercial intent of the Claimant, calculated to turn a profit from the Defendant's occupation, negated any plea for relief by estoppel.

23. The Learned Judge in Chambers erred in failing to consider or at all that the Claimant suffered no loss whilst the Defendant was paying and thereby relieving the Claimant of the majority of its contractual obligation to the Factories...