Ken's Sales & Marketing Ltd v Earl Levy and Others

• Jurisdiction: Jamaica
• Judge: Straw J
• Judgment Date: 14 March 2012
• Neutral Citation: [2012] JMSC Civ 29
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2009 HCV 06249
• Date: 14 March 2012

[2012] JMSC Civ 29

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CLAIM NO. 2009 HCV 06249

Between

Ken's Sales & Marketing Ltd

Claimant

and

Earl Levy

1st Defendant

and

Trident Villas & Hotel Ltd

2nd Defendant

and

Castlewood Corp Inc.

Interested Party

and

Dehring Bunting & Golding Ltd

Garnishee

and

Pelican Securities Ltd

3rd Defendant

and

Beverley Levy

4th Defendant

and

Percy Junor Ltd

5th Defendant

Mr. Glenroy Mellish for the Claimant

Mr. Maurice Manning for the 1 ^st and 2 ^nd Defendants

Dr. Lloyd Barnett and Mr. Weiden Daley for the 3 ^rd and 4 ^th Defendants

Ms. Elizabeth Salmon for the 5 ^th Defendant

Application to Strike out Claim — Res Judicata — Abuse of Process

Straw J

1 The applications before me are by the 1 ^st , 2 ^nd , 3 ^rd , 4 ^th and 5 ^th defendants to strike out Claim HCV6249/2009 filed by the claimant on the 25 ^th November 2009. The claimant is seeking, inter alia , declarations against equitable charges obtained by the 3 ^rd , 4 ^th and 5 ^th defendants in relation to six (6) parcels of land owned by the 1 ^st defendant, Mr. Earl Levy.

2 The history of litigation between the claimant and various defendants has been long and fierce. I will attempt therefore to summarize only those facts that are strictly relevant to a determination of the issues before me. The claimant, Ken's Sales, obtained judgment against the 1 ^st defendant, Mr. Earl Levy on the 24 ^th July 2002 for a debt owed in Suit No.CL/K-009/2001. The debt now stands at approximately $230 million. Ken's Sales has been unable to obtain satisfaction of this debt.

3 The 3 ^rd defendant, Pelican Securities Limited, the 4 ^th defendant, Mrs. Beverly Levy, wife of Mr. Levy, and the 5 ^th defendant, Percy Junor Limited have obtained equitable charges in relation to the said six (6) parcels of land.

4 The parcels of land were subsequently sold by an order of the court and the proceeds are being held in a joint account in the names of the respective attorneys. This fund is in the amount of US$3 million. Suffice it to say, that as a result of various interlocutory applications and decisions by the Court of Appeal and Privy Council, the claimant who had an equitable charge over the lands, is now an unsecured creditor.

5 Ken's Sales had previously filed Suit No. HCV 243/2004 against Beverly Levy and Pelican Securities, for declarations that its equitable charge ranked in priority to any equitable interest claimed by these defendants. Lord Scott of Foscote who delivered the judgment of the Privy Council on the 24 ^th January 2008 [Appeal No 87 of 2006] placed the issues of the parties in perspective [paragraph 15]:

‘The pot of gold, so to speak, now consists of the purchase money in the joint account. There are disputed claims to the money by Ken's Sales on the one hand and by Mrs. Levy, and Pelican, and presumably by Percy Junor Ltd., on the other. The resolution of these claims will depend on who can establish proprietary claims and whose proprietary claims are entitled to priority.

Subject to possible claims by Percy Junor Ltd., a company not so far as their Lordships are aware, party to any proceedings yet instituted, the issues that arise all fall within the scope of the priority proceedings brought by Ken's Sales against Mrs. Levy and Pelican which led to the default order made by Dukharan J on 27 July 2004. The order of that date, while it stands, binds Mrs. Levy and Pelican. The order is still under appeal but, if it stands, Ken's Sales can claim an equitable interest in the proceeds of sale in priority to any equitable interest that Mrs. Levy or Pelican can claim. If it does not stand, the proprietary and priority issues raised by Ken's Sales application in Action 243 must be tried in the High Court with evidence and argument in the usual way.’

6 On the 11 ^th February 2008, the Court of Appeal allowed the appeal of Mrs. Levy and Pelican, thereby setting aside the default judgment of Dukharan J, obtained by Ken's Sales in Action 243 and remitted Action 243 to the Supreme Court for hearing.

These statements having been made by both superior courts, one would have thought that Ken's Sales would have pressed full speed ahead to have Action 243 adjudicated in the High Court. However, on the 15 ^th February 2008, Ken's Sales applied ex parte for a provisional order of attachment in relation to the lands, albeit that, with the knowledge of all the parties and the approval of the court, the lands had been sold and the funds in escrow. The provisional order was obtained on the 20 ^th February and the date of the 2 ^nd April 2008, set for the consideration of the making of a final order of attachment.

7 Mrs. Levy and Pelican were served (with the order) as interested parties in the lands. As a result, applications were filed on their behalf to have the provisional attachment order discharged. That application awaits my determination of the applications before me. My sister, Mangatal J, summarises the history of the litigation between the parties to a certain extent in her judgment in Suit No. CL/K009/2001 (in relation to the Final Attachment Order) [delivered on the 15 ^th September 2008]. I wish to express my gratitude to my sister as it has aided my understanding of what transpired after the Court of Appeal decision in February 2008.

8 Mangatal J (paragraph 18) stated that one of the bases cited by Mrs. Levy and Pelican for setting aside the provisional attachment order was material non disclosure, in particular the alleged failure by Ken's Sales to point out a number of matters, including the fact of the existence of Action 243 in which the claims regarding the priorities were raised.

9 On the 14 ^th March 2008, Ken's Sales unilaterally discontinued Action 243. Subsequently, applications were filed by Mrs. Levy, Pelican and Percy Junor for payments to be made of monies due and owing to them by Mr. Levy out of the funds in escrow. (These applications are also pending my determination in this matter). A date was also set for the hearing of the Final Attachment Order.

10 On 10th September 2008, Mangatal J began the hearing in the Final Attachment Order. However, during the course of the proceedings, she requested that the attorneys make submissions on the appropriateness of the issues that she was being asked to adjudicate upon. At the end of these submissions, she terminated the hearing, having reached the decision that the proceedings before her were indeed inappropriate. She stated as follows [para 28, 29]:

‘It appears to me that what Ken's Sales is really trying to do by way of these execution proceedings, is to have the court determine complex issues of priorities, which ——— may involve the court in not only resolving disputes between parties as to their rights to the funds as is, but would require the court to pronounce upon the validity of admitted debts ———.

Not only is the Claimant —- trying to say it's claim is in priority to others, but without any pleadings or any ground being expressly set out in the application, Ken's sales is impliedly asking the court to make findings and declarations, which if they are to succeed, would perhaps involve very serious allegations of bad faith, illegality, fraud and conspiracy to defraud creditors.’

The present claim was subsequently filed about 14 months later.

The Applications

11 The defendants seek a declaration that this court should not exercise jurisdiction in this claim pursuant to the CPR [2002] 9.6 [1] [b]. They are also seeking orders that the proceedings be struck out pursuant to the CPR 26.3 [1] b and 26.3 [1] [c]. The relevant sections read as follows:

‘ Rule 9.6 (1) A defendant who -

• (a) …; or

• (b) argues that the court should not exercise its jurisdiction, may apply to the court for a declaration to that effect.’

‘Rules 26.3 [1] In addition to any other powers under these Rules, the court may strike out a statement of case or part of a statement of case if it appears to the court-

• (a) ….;

• (b) that the statement of case or the part to be struck out is a abuse of the process of the court or is likely to obstruct the just disposal of the proceedings; or

• (c) that the statement of case or the part to be struck out discloses no reasonable grounds for bringing or defending a claim.’

12 It is the contention of the defendants that the present claim is an abuse of process of the court and additionally, there are no reasonable grounds for bringing the claim.

No Reasonable Grounds for bringing the Claim

13 I will examine this issue first merely for the sake of convenience. A statement of case may be struck out on the ground that it fails on its face to disclose a claim or defence which is sustainable in law [Rule 26.3 [1] [b].

Ken's Sales filed an Amended Fixed Date Claim Form on 26 ^th January 2011. It is seeking several declarations, inter alia , in relation to the equitable charges of Mrs. Levy, Pelican and Percy Junor. The essence of the attack surrounds the circumstances under which the charges were created and allegations of bad faith and fraud. There are also allegations of illegality in relation to the loan documents of Mrs. Levy, Pelican and Percy Junor. A declaration is also being sought to the effect that the 2 ^nd , 3 ^rd 4 ^th and 5 ^th defendants are to all extents and purposes agents of Mr. Levy and that it is just to treat the transactions between the defendants as transactions of the 1 ^st defendant.

There is also a request for specific disclosure to be made by Pelican as to the identity of the beneficial holders of its shares at the material time.

Submissions of Defendants

14 Dr. Barnett, counsel for Pelican and Mrs. Levy made submissions in relation to the above issue. Mr. Manning, counsel for Mr. Levy and Trident, also made submissions and...