Jamaica Redevelopment Foundation Inc. v Capital Solutions Ltd

• Jurisdiction: Jamaica
• Judge: Mangatal J:
• Judgment Date: 23 October 2009
• Judgment citation (vLex): [2009] 10 JJC 2301
• Docket Number: CLAIM NO. 2008 HCV 02664
• Court: Supreme Court (Jamaica)
• Date: 23 October 2009

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CLAIM NO. 2008 HCV 02664

BETWEEN

JAMAICAN REDEVELOPMENT FOUNDATION INC.

CLAIMANT

AND

CAPITAL SOLUTIONS LIMITED

DEFENDANT

IN CHAMBERS

MORTGAGES - Mortgage - Priority - Discharge of mortgage as opposed to purchase or acquisition - In what circumstances does the presumption arise that stranger paying off mortgage intends to keep mortgage alive - What amounts to evidence of contrary intention

Mortgage-Priority- Discharge of Mortgage as Opposed to purchase or acquisition- In what circumstances does the presumption arise that stranger paying off mortgage intends to keep mortgage alive- What amounts to evidence of contrary intention.

Mangatal J

1 This is a claim in which the parties seek declarations as to the status and priority of certain mortgages in relation to premises owned by Howard Clarke "Mr. Clarke", registered at Volume 1389 Folio 627 of the Register Book of Titles.

2 Before discussing the very interesting issues raised in this case, I wish to commend both Counsel for the well-thought out and thorough submissions which were made before me. I do not mind stating from the outset that the issues proved more complicated and less easy of resolution than I had at first blush thought. The matter concerns important points to do with the law pertaining to Mortgages and proved most thought-provoking.

FACTUAL BACKGROUND

3 A useful starting point is to set out the factual background which has given rise to the present dispute. The Claimant Jamaica Redevelopment Foundation Inc. "JRF" is a financial institution. By deed of assignment dated the 30 ^th of January 2002 JRF acquired the loans and banking facilities originally granted by the National Commercial Bank Jamaica Limited "NCB" to its customer Mr. Clarke. JRF acquired the loans from Refin Trust who purchased same from Recon Trust and also acquired all of the securities for the loans including mortgage numbered 908276 registered on the 24 ^th of November 1995 in favour of NCB in respect of property 6 Mimosa Avenue, Kingston 11, being registered at Volume 139 Folio 627 of the Register Book of Titles.

4 Prior to the registration of mortgage numbered 908276, a mortgage numbered 640513 had been registered in favour of Life of Jamaica Limited "LOJ", which was registered on the Certificate of Title to secure a sum of $147,005.43. This mortgage was later assigned to the Jamaica National Building Society "JNBS" and the transfer was noted on the Certificate of Title as Transfer No. 1300569.

5 Mr. Clarke defaulted on mortgage number 908276 which had been acquired by JRF.

6 In or around 2003, the Defendant Capital Solutions Limited "Cap-Sol" was approached by Mr. Clarke who was then its employee. Mr. Clarke requested a loan facility. At this time the Certificate of Title for the property which was to stand as security for the loan from Cap-Sol was endorsed with the two mortgages, viz. mortgage number 640513, acquired by JNBS, and mortgage number 908276, acquired by JRF.

7 By letter dated July 30 ^th 2003, Cap-Sol wrote to Dennis Joslin Jamaica Limited "Dennis Joslin", JRF's loan servicer, enclosing a cheque in the sum of $375,625.88, which Cap-Sol claimed was being sent in full and final settlement of Mr. Clarke's loan accounts and requested a duly executed Discharge of Mortgage.

8 By letter dated September 23 2003 Dennis Joslin returned the cheque to Cap-Sol on the basis that it was not able to discharge the mortgage for that amount.

9 Cap-Sol paid the amounts outstanding on mortgage No. 640513 acquired by JNBS. By letter dated 4 ^th November 2004, copied to Dennis Joslin, and addressed to Cap-Sol, JNBS indicated that mortgage No. 640513 was discharged, the loan secured by this mortgage having been repaid in full. Under cover of this letter JNBS forwarded to Cap-Sol the Duplicate Certificate of Title along with the duly executed Discharge of Mortgage on the following understanding:

• (a) That Cap-Sol would have JNBS's Discharge endorsed on the Duplicate Certificate of Title.

• (b) Cap-Sol upon completion of the registration of its loan would forward the title to JRF's loan servicer Dennis Joslin.

10 By letter dated February 23 2005 Dennis Joslin wrote to Cap-Sol requesting the forwarding of the Certificate of Title as had been required of Cap-Sol by JNBS.

11 Initially, by letter dated March 2 2005 Cap-Sol apologized for the delay and requested further time in which to send the Certificate of Title. However, by letter dated March 22 2005 Cap-Sol appears to have changed its stance and now indicated that it had purchased mortgage No. 640513 from the JNBS and that they were in the process of registering their second interest of $747,723.00 as a third mortgage (my emphasis). They indicated that as Mr. Clarke had not cleared the facility in respect of the JNBS mortgage which Cap-Sol claimed to have purchased, Mr. Clarke was not entitled to have the first mortgage discharged from the title.

12 Cap-Sol registered mortgage number 136448 on the 2 ^nd of August 2005 to secure monies in the said mortgage stamped to cover the sum of $747, 723.11.

JRF'S CLAIM

13 JRF now seeks the following relief against Cap-Sol:

CAP-SOL'S DEFENCE AND CASE

• a. A Declaration that mortgage numbered 908276, registered on the 24 ^th of November 1995 on Certificate of Title registered at Volume 1389 Folio 627 of the Register Book of Titles ranks in priority to all subsequent mortgages currently registered or entitled to be registered including mortgage numbered 1346448 registered in favour of Cap-Sol on the 2 ^nd day of August 2005 and Mortgage numbered 640513 in favour of JNBS registered on the 14 ^th of June 2004. (the mortgage was registered in favour of LOJ on the 11 ^th October 1990 and transferred to JNBS on the 14 ^th June 2004).

• b. A Declaration that mortgage numbered 640513 registered on the 11 ^th of October 1990 in favour of LOJ is wholly discharged.

• c. A Declaration that JRF is entitled to possession of the Duplicate Certificate of Title registered at Volume 1389 Folio 627 of the Register Book of Titles.

• d. An order that Cap-Sol deliver forthwith to JRF the said Duplicate Certificate of Title.

• e. An order permitting JRF to serve this order on the Registrar of Titles for her to give effect to the terms of this order that Cap-Sol register the Discharge of Mortgage in respect of Mortgage numbered 640513 registered on the 11 ^th of October 1990 on Certificate of Title registered at Volume 1389 Folio 627 in favour of LOJ and that the Registrar of the Supreme Court is empowered to execute all necessary documents to effect the discharge if Cap-Sol fails or refuses to do so.

• f. Damages.

14 Cap-Sol claims to be beneficially entitled to the rights and privileges attached to Mortgage Number 1300589(Mortgage No. 640513) noted on the Duplicate Certificate of Title registered at Volume 1389 Folio 627 of the Register Book of Titles in favour of JNBS on the 11 ^th October 1990. This beneficial entitlement is claimed by virtue of loan facilities extended by Cap-Sol to Mr. Clarke, the registered proprietor of the property.

15 Pursuant to a request from Mr. Clarke for their respective balances to close, JNBS and JRF both furnished their payout balance. JRF provided its statement under "without prejudice cover". In reliance on both confirmations, Cap-Sol extended credit facilities to Mr. Clarke and forwarded to both JNBS and JRF its cheques representing full and final settlement in exchange for their respective discharge of mortgage.

16 Whereas JNBS honoured its statement to close and forwarded the Duplicate Certificate of Title along with their discharge of mortgage, JRF responded by providing a previously undisclosed balance also under "without prejudice" cover and returned Cap-Sol's cheque.

17 Cap-Sol's beneficial entitlement arose from extending a full value loan facility to the registered proprietor Mr. Clarke while JRF claims a beneficial entitlement that is undisclosed on the face of the Duplicate Certificate of Title and for an undisclosed consideration.

18 Cap-Sol by way of Counterclaim seeks the following relief:

THE ISSUES TO BE DETERMINED

• (a) A Declaration that JRF's action has grossly prejudiced both Cap-Sol's mortgagor, Mr. Clarke, as well as Cap-Sol.

• (b) A Declaration that Cap-Sol's interest in mortgages # 1300589 and #1346448 rank in legal and /or equitable priority to any other mortgage endorsed on the face of the Duplicate Certificate of Title registered at Volume 1389 Folio 627 of the Register Book of Titles.

• (c) A Declaration that in the event that JRF can establish a beneficial entitlement to the mortgage interests as claimed, the registered proprietor Mr. Clarke and Cap-Sol are entitled to rely on JRF's statement to close of July 23, 2003, and such interest as may be deemed to have accrued thereto to rank inferior to Cap-Sol's claim.

• (d) That Cap-Sol be at liberty to exercise the Powers of Sale contained in its mortgage registered at #1346448 and that the proceeds of sale be distributed in accordance with the interests as declared by this Honourable Court.

• (e) Damages.

19 In my view, the issues that fall for determination are as follows:

The First issue: Whether JRF is entitled to the rights and privileges of Mortgage Number 908276?

• (a) Whether JRF is beneficially entitled to the rights and privileges of mortgage number 908276?

• (b) Whether Mortgage number 640513 acquired by JNBS by virtue of transfer number 1300569 has been discharged and the effect of the discharge of the said mortgage?

• (c) Whether Mortgage number 908276 registered on the 24 ^th of November 1995 ranks in priority to Mortgage Number 1346448 registered on the 2 ^nd of August 2005?

• (d) Which of the parties are entitled to hold the Duplicate Certificate of Title?

20 (20)...