Keith Rose v Colleen Rose

• Jurisdiction: Jamaica
• Judge: Calys Wiltshire J. (AG.)
• Judgment Date: 05 October 2018
• Neutral Citation: [2018] JMSC Civ 140
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2015 HCV 02179
• Date: 05 October 2018

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CIVIL DIVISION

CLAIM NO. 2015 HCV 02179

Between

Keith Rose

1 ^st Claimant

and

Colleen Rose

2 ^nd Claimant

and

First Caribbean International Bank (Jamaica) Limited

Defendant

Miss Kashina Moore and Mr. J. Barrett instructed by Nigel Jones and Co. for the Claimants.

Mrs. Alexis Robinson and Miss Amanda Montaque instructed by Myers, Fletcher and Gordon for the Defendant.

Mortgage — Bridging loan — Negligence — Fiduciary duty — Nature of the relationship between mortgagee and mortgagor — Responsibilities of mortgagee — Classification of client's loan account — Method of calculation of interest rate — Legal costs incurred before commencement of claim.

Calys Wiltshire J. (AG.)

Introduction

1 The Claimants, a husband and wife, have brought this claim against the Defendant to recover damages for negligence and or breach of fiduciary duty in respect of the management and classification of the Claimants' loan account with the Defendant. The Claimants are seeking the following:

• ”1) An order for an account of sums paid by the Defendant in relation to loans bearing reference numbers 1001317262 and 1001342342;

• 2) An order for the rectification of the Claimant's accounts to reflect sums paid to the Defendant;

• 3) An order that the Defendant reverse the classification of the Claimant's loan;

• 4) An injunction restraining a sale of said property located at Lot 2, Battersea, off Old Kendal Road, Mandeville, Manchester registered at 1323 Folio 289:

• 5) Damages in excess of twenty three million two hundred and forty nine thousand one hundred and forty five dollars ($23,249,145.00)

• 6) Interest pursuant to the Law Reform ( Miscellaneous Provisions) Act on the amount found to be due to the Claimant at such a rate and for such periods as the Court shall think fit;

• 7) Costs; and

• 8) Such further and other relief.” [as the Court deems fit]

Background

2 In April 2005 the Claimants were approved for a loan in the sum of $6,000,000.00 from the Defendant for the purpose of constructing a house. The loan was secured by a mortgage over property at Lot 2, Battersea, off Old Kendal Road, Mandeville, in the parish of Manchester and registered at Volume 1348 Folio 327 of the Register Book of Titles. The terms of the loan were contained in a commitment letter dated April 21,2005.

3 The Claimants' loan accounts were classified by the Defendant as non performing in April 2009 on the grounds that the Claimants failed to make the required payments for a period of 90 days. The Claimants objected to the action taken by the Defendant and a dispute arose regarding the management of their loan accounts. The end result was the filing of this claim. The particulars of claim outlined the following:

PARTICULARS OF NEGLIGENCE OF THE DEFENDANT

• (a) Failing to properly manage loan account

• (b) Failing to properly calculate interest on loan account

• (c) Failing to withdraw required funds necessary to service the loan account

• (d) Failing to rectify the incorrect classification of the loan

• (e) Misappropriating funds

By reason of the aforesaid the Claimants suffered losses and incurred expenses.

PARTICULARS OF INJURIES

PARTICULARS OF LOSSES
Bank's legal fees	$500,000.00
Loss of earning	$8,820,000.00
Escalation in construction cost	$3,500,000.00	Security cost for construction site	$505,250.00
Rent	$8,917,895.00
Total	$22,243,145.00

• 1) Due to the Defendant's wrongful classification of the Claimants' loan the Claimants found themselves borrowing from friends and this affected the Claimants negatively as this was humiliating for them and the Defendant has ruined their reputation as persons with good credit standing.

• 2) After being blacklisted as a result of the Defendant's wrongful classification the Claimants felt embarrassed and hopeless, as the Defendant was unwilling to assist them in resolving the errors.

• 3) After the Defendant threatened to exercise its power of sale over the property the Claimants were depressed and severely stressed as their efforts to resolve the situation proved hopeless.

• 4) By reason of the aforesaid the Claimants suffered personal injury and incurred expenses.

• 5) The 1st Claimant, Keith Rose, who was born on June 20, 1965 displays symptoms such as depressed mood, lack of interest or pleasure in usual life events, depressed appetite and experience difficulty in social and occupational functioning. The 1st Claimant experienced psychomotor changes, decline in energy, memory and concentration. The following diagnosis of the 1st Claimant and further details are set out in the medical report of Dr. Terrence Bernard, dated December 15, 2015. a. Post Traumatic Stress Disorder (PTSD) b. Major Depressive Disorder, classified as severe

• 6) The report of Dr. Terrence Bernard indicates that the 1st Claimant suffered these injuries as a result of the Defendant's conduct as it relates to the matters previously set out herein.

• 7) The 2nd Claimant, Colleen Rose, who was born on January 25, 1969 displays symptoms such as depressed mood, feelings of worthlessness, loss of interest in formerly pleasurable activities, feelings of worthlessness, tiredness, difficulty concentrating, loss of interest in formerly pleasurable activities, increased appetite, weight gain, difficulty sleeping and difficulty in social and occupational functioning. The following diagnosis of the 2nd Claimant and further details are set out in the medical report of Dr. Terrence Bernard, dated December 15, 2015. a. Major Depressive Disorder, classified as severe.

• 8) The report of Dr. Terrence Bernard indicates that the 2nd Claimant suffered these injuries as a result of the Defendant's conduct as it relates to the matters previously set out herein.

• 9) According to the medical report of Dr. Terrence Bernard the treatment recommendations for the 1st Claimant are 18 months of pharmacotherapy and 20 sessions of psychotherapy which are aimed at reducing the symptoms of depression and PTSD. The total estimated treatment cost is six hundred and ten thousand dollars ($610,000.00).

• 10) According to the medical report of Dr. Terrence Bernard the treatment recommendations for the 2nd Claimant are 12 months of pharmacotherapy and 12 sessions of psychotherapy which are aimed at reducing the symptoms of depression. The total estimated treatment cost is three hundred and ninety-six thousand dollars ($396,000.00).

• 11) The Claimants claim interest pursuant to the Law Reform ( Miscellaneous Provisions) Act on the amount found to be due to the Claimant at such a rate and for such periods as the Court shall think fit.”

The Defence

4 The Defendant disputed the claim and denied that it had been negligent as alleged

by the Claimants or in any way at all. The Defendant stated in their defence that the Claimants” accounts had been properly managed, the interest had been calculated accurately and funds to service the loan had been withdrawn when they became available.

Claimants' Case

5 Two affidavits and a witness statement of Keith Rose were permitted to stand as the Claimants' evidence in chief. Mr. Keith Rose testified that he and his wife received a loan from the Defendant in the sum of $6,000,000.00 to complete building their house. The loan was subject to two interest rates, 13.5% and 15.75%, and secured by a mortgage registered against the title for property located at Lot 2, Battersea off Old Kendal Road, Mandeville, Manchester.

6 The terms of the loan required them to open an account with the Defendant from which monies would be deducted to service the loan. As a result of the different interest rates being applied, he and his wife had two loan accounts, #1001317262 and #1001342342. As it was a bridging loan they were only required to pay the interest charges. His review of a loan schedule received from the Defendant revealed that the monthly deductions covered the monthly interest charges and amounts payable which amounted to $73,125.00.

7 On or about May 2009 he was advised by the Defendant's representative that the mortgage was classified as non-performing and needed $160,000.00 to be updated. He stated that at all material times there was money in the account to service the loan and avoid non-performing status. He went on that the Bank of Jamaica regulations stipulate that loans are deemed non-performing if they are not serviced for 90 days and their account had never been in arrears for 90 days nor had they ever owed the Defendant any sums which would warrant their account being classified as non-performing.

8 Mr. Rose accused the Defendant of incorrectly calculating the interest due on the loan and withdrawing less than what was needed to service the loan. He said that the Defendant also passed on to them legal fees of $500,000.00, which they incurred when they sought legal advice to resolve the matter. He also claimed that the Defendant issued a statutory demand to exercise its power of sale which it was not entitled to do as the classification was incorrect and it was their negligence that resulted in the improper classification.

9 Mr. Rose further testified that he had taken one loan from the Defendant, although the loan was divided into two equal sums with different interest rates applied. He said he received the sums over six disbursement dates. It was also stated that the Defendant's breach of duty and negligence caused the Claimants to suffer emotional distress and damaged their reputation as persons with good credit standing.

10 Under cross examination Mr. Rose remained adamant that there was only one loan but agreed that there were two loan accounts. He disagreed with counsel for the Defendant that more funds would have to be applied to the loan with the higher interest rate. He denied that he often paid less than the...