Leighton McKnight and Novelette McKnight v Jamaica Mortgage Bank
| Jurisdiction | Jamaica |
| Judge | Panton P,Harris JA,Phillips JA |
| Judgment Date | 28 September 2012 |
| Neutral Citation | JM 2012 CA 85 |
| Docket Number | SUPREME COURT CIVIL APPEAL NO 36/2010 |
| Court | Court of Appeal (Jamaica) |
| Date | 28 September 2012 |
[2012] JMCA Civ 44
JAMAICA
IN THE COURT OF APPEAL
The Hon Mr Justice Panton P
The Hon Mrs Justice Harris JA
The Hon Mr Justice Phillips JA
SUPREME COURT CIVIL APPEAL NO 36/2010
Michael Hylton QC and Sundiata Gibbs instructed by Michael Hylton & Associates for the appellants
Garth McBean and Stuart Stimpson instructed by Ramsay Stimpson for the respondent
CIVIL PROCEDURE - Stay of execution - Order for removal of caveat - Order for damages to be assessed - Registration of Titles Act, s. 130- Costs
I have read the judgment of Harris JA and agree with the reasoning and conclusion. I have nothing to add.
This is an appeal against the decision of E J Brown J (Ag), (as he then was) contained in an order dated 22 March 2010, whereby he made the following orders in favour of the appellants:
‘(1) The Claimants are awarded damages in the sum of $5,270,775.95
(2) Costs to the Claimants to be taxed or agreed.
(3) A stay of execution is granted until April 5, 2010.’
On 31 July 2012, we ordered that the appeal is dismissed and awarded costs to the respondent to be agreed if not taxed. We now put our reasons in writing as promised.
The appellants are the proprietors of land situated at 21 Dillsbury Avenue, Kingston 6 in the parish of Saint Andrew, registered at Volume 1110 Folio 985 in the Register Book of Titles (hereafter referred to as ‘the property’). On 25 August 2004, the appellants and KES Development Company Limited (hereafter referred to as ‘KES’) entered into a joint venture agreement to construct eight townhouses on the property. Under that agreement, KES was responsible to secure its own financing for the project. At the end of the construction, two of the townhouses were to be transferred to the appellants and the six, remaining, were to be transferred to KES. The appellants were to provide KES with a mortgage free title to facilitate the transfer of splinter titles for the remaining six townhouses.
KES obtained a loan from Jamaica Mortgage Bank (hereafter referred to as ‘the bank’) and subsequently defaulted thereon. It is apparent that the bank, discovering that it was without security for the loan, sought to have the appellants' consent to have the property charged with a mortgage for the security of the sum of $41,339,100.41 as ‘interest for the Dillsbury project’. The bank, following the refusal of the appellants to agree to the proposal, in October 2007, claiming to have an interest in the property, lodged a caveat against the certificate of title for the property without the appellant's knowledge. Up to that time, the townhouses were incomplete.
In an affidavit filed by the 1 st appellant on 5 February 2010, he averred that on 15 June 2005, one Mr David McBean entered into two agreements in respect of lot seven, one with the appellants and the other with KES. The agreement with the appellants was for the sale of lot seven to him and the agreement with KES was for the construction of a townhouse on that lot. Mr McBean paid a deposit of US$30,000.00 to KES' attorneys-at-law Mesdame Jennifer Messado and Company for construction of the unit. Upon KES' failure to fulfill its contractual obligations, Mr McBean requested and obtained a partial refund of his deposit. On 2 November 2009, Mr McBean entered into an agreement with the appellants to purchase the unit and the land for a sum of $55,000,000.00.
It was an averment of the 1 st appellant, that after becoming aware that KES had difficulty in completing the project, the appellants made arrangements with a new developer and another financial institution to complete the construction of the townhouses but discovered, in June 2008, that the caveat had been lodged by the respondent. He also averred that the existence of the caveat prevented the appellants from obtaining financing for them to complete the construction.
The appellants, discovering the existence of the caveat, sought to enforce their proprietary rights by invoking section 140 of the Registration of Titles Act by which provision a caveatee may ‘summon the caveator to attend before the Supreme Court or a Judge in Chambers to show cause why such caveat should not be removed’. As a consequence, on 23 September 2008, they filed a fixed date claim form seeking the following:
‘1. An order pursuant to section 140 of the Registration of Titles Act that the caveat lodged by the defendant against the Certificate of Title for 21 Dillsbury Avenue registered at Volume 1110 Folio 985 of the Register Book of Titles be removed forthwith;
2. an order for damages to be assessed and paid to the claimants pursuant to section 143 of the Registration of Titles Act for damages caused to the claimants as a result of the wrongful lodgment of the said caveat;
3. interest; and
4. costs.’
The matter came on for hearing on 24 February 2009 and on 6 April 2009, N McIntosh J (as she then was) held that the respondent had no reasonable cause to lodge the caveat against the appellants' title and ordered its removal. The caveat was removed on 16 April 2009. She also ordered that damages be assessed pursuant to section 143 of the Registration of Titles Act and that the appellants' claim for interest be addressed at the time of the assessment of damages.
In an affidavit of the 1 st appellant filed on 12 June 2009, the appellants claimed damages of $26,004,303.71. This, they claimed under the following four heads:
‘a. Increased construction costs;
b. Increased financing costs;
c. Loss of Interest on the proceeds of sale of the two townhouses owned by us in the development; and
d. Other additional expenditures incurred as a result of the delay caused by the lodging of the caveat.’
The following were specified as claims for their loss:
| a. Increased construction costs | 15,661,147.07 |
| b. Increased financing costs | 1,914,983.09 |
| 17,576,130.16 | |
| *Less amounts to be recovered from purchasers | 12,737,967.09 |
| 4,838,163.07 | |
| c. Loss of interest on sale proceeds | 20,733,527.76 |
| d. Other expenditure | 432,612.88 |
| Total $26 | $26,004,303.71 |
The learned trial judge awarded the sums claimed for items (a), (b) and (d) above, but rejected the claim for item (c), that is, loss of interest on the proceeds of sale. The appellants now challenge the learned judge's decision. It is against the failure of the learned judge to have made an award in respect of item (c) that this appeal lies.
The notice of appeal was duly filed on 24 March 2010 and the appellants relied on three grounds. These are:
‘(a) The learned judge's finding that there was no agreement in place is contrary to the unchallenged documentary and other evidence.
(b) The learned judge erred in finding that the delay caused by the lodgment of the caveat did not cause the Appellants actual loss in respect of Lot 7 and Lot 8.
(c) The learned judge erred in concluding that the Appellants' loss was not reasonably foreseeable.’
Ground (a): The learned judge's finding —no agreement —contrary to the evidence
Counsel for the appellants Mr Michael Hylton QC, in addressing this ground, submitted that the learned trial judge's finding that there was no agreement for sale in place in respect of townhouses seven and eight during the life of the caveat led him to the conclusion that the wrongful lodgment of the caveat did not cause the appellants actual loss in respect of those units. Learned Queen's Counsel contended that the learned trial judge was wrong in two respects. First, he argued, the judge assumed that loss would only have been suffered if the appellants had entered into agreements for sale at the time the caveat existed and second, he held that no agreement for sale had been entered into.
The evidence, counsel contended, was that the appellants intended to complete and sell the two townhouses. There was no evidence, he argued, that market conditions had changed over the 12 months that the caveat had delayed the development. In those circumstances, on a balance of probabilities, their receipt of the purchase price of the townhouses would have been delayed, whether they had entered into an agreement at that time or not, he further argued. For this submission, Queen's Counsel relied on the judgment of the Court of Appeal of Singapore in Ho Soo Fong and Anor v Standard Chartered Bank [2007] 2 SLR 181; [2007] SGCA 4. He also contended that if they had not already entered into an agreement, the caveat would have delayed their doing so or delayed the completion of any agreement they executed. However, learned Queen's Counsel argued, the unchallenged documentary evidence before the learned trial judge showed that an agreement for sale in respect of lot number seven existed during the life of the caveat. There is no purchaser for lot eight although Mr McBean has agreed to purchase lot seven for $55,000,000.00. Therefore, by the learned trial judge's own reasoning, there had been actual loss suffered by the appellants, he submitted.
Mr Garth McBean, in response, submitted that the learned trial judge's finding is correct for two reasons. Firstly, in respect of townhouse number eight, there was no agreement for sale exhibited or any evidence of such an agreement during the currency of the caveat and there was also no evidence of any offers for the sale of same, he argued.
Secondly, counsel argued, with respect to townhouse number seven, the 1 st appellant, in the affidavit, in referring to and exhibiting an agreement for sale with Mr David McBean entered into on 15 June 2005, said ‘…KES...
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