Lloyd Goldson v Devon Evans
| Jurisdiction | Jamaica |
| Judge | Wint-Blair, J |
| Judgment Date | 31 July 2018 |
| Neutral Citation | [2018] JMSC Civ 115 |
| Court | Supreme Court (Jamaica) |
| Docket Number | CLAIM NO. 2017HCV02050 |
| Date | 31 July 2018 |
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
CIVIL DIVISION
CLAIM NO. 2017HCV02050
and
and
Mrs. Denise Senior-Smith instructed by Oswest Senior-Smith and Company for the Claimant
1 st and 2 nd Defendant not served
Mr. Kevin O. Powell instructed by Hylton Powell for the 3rd Defendant
Application for Summary Judgment and to dispense with mediation — whether the bank is entitled to retain the duplicate certificate of title to the property purchased by bona fide purchaser — whether the interest of the mortgagee is superior to that of the bona fide purchaser — estoppels by conduct — Real Estate Board charge whether it ranks in priority over that of the mortgagee — whether there is a real prospect of success — Rules 15.2 and 74.4(1) Civil Procedure Rules — sections 26, 31, 33 Real Estate (Dealers and Developers) Act, section 70, Registration of Titles Act
The 3rd defendant (“the bank”) made a loan of $197,000,000 to the 2 nd defendant (“NAHC”). The proceeds of that loan was used by NAHC and the 1 st Defendant in the construction of townhouses at 24 Paddington Terrace, Kingston 6 which is registered at Volume 1378 Folio 356 of the Register Book of Titles (“the property”).
As security for the loan, the bank took two mortgages of the property (“the mortgages”) dated December 11, 2008. Both were registered on the certificate of title for the property on January 22, 2009. NAHC has defaulted on its loan repayments and remains indebted to the bank to the tune of $1,822,915,762.86 as at January 2018.
The property was later sub-divided and splinter titles issued in respect of each townhouse. The claimant entered into an agreement with NAHC to purchase townhouse no. 5 on July 1, 2011. He asserts that his entering into the agreement for sale was some seven months before the bank became involved, however this is not the case. The claimant spent some $3,000,000 improving the complex in addition to completing his townhouse. He lodged a caveat on October 12, 2012 by virtue of the said agreement for sale dated July 1,2011. To date, the title to townhouse no. 5 has not been transferred to him.
This claim is brought by the purchaser of townhouse no. 5, the title to which is registered at Volume 1454 Folio 909. Both mortgages are registered on the certificate of title to townhouse no. 5 and the bank has refused to discharge the said mortgages or release the certificate of title to the claimant unless he pays the sum of USD$278,142.94 to the bank.
The Real Estate Board has also, pursuant to the Real Estate (Dealers and Developers) Act registered its own charge on the certificate of title to the property on the October 23, 2009.
The claimant seeks an order from this court to have the bank release the title for townhouse no. 5 to him in addition to damages, interest and costs. It is noteworthy that the Real Estate Board is not a party to this action.
This application is brought by the bank on the ground that the claim has no real prospect of succeeding against it. The bank's position is that it is entitled to retain the duplicate certificate of title to townhouse no. 5 as it possesses a legal interest which is indefeasible and superior to the claimant's interest.
Further, the bank argues that it has a strong case for summary judgment and has no desire to negotiate a settlement, having given due regard to a previous unsuccessful attempt at resolving the matter and submits that as a consequence mediation should be dispensed with under rule74.4(1).
Mr. Powell argued on behalf of the bank that based upon the particulars of claim filed on June 26, 2017 the claimant believes that he is entitled by virtue of his agreement for sale with NAHC to have the title for townhouse no. 5 transferred to him in circumstances where he has no agreement with the bank and neither has the bank received any of the proceeds of sale. The bank has not made any representations to the claimant in respect of any payments he may have made towards improvements to the complex which should have been done by NAHC and the first defendant.
It is undisputed that the claimant has lodged a caveat against the title for townhouse no. 5 to protect his beneficial interest. Counsel relied on the case of Life of Jamaica Ltd v Broadway Import & Export Limited SCCA 17/96 delivered on October 27, 1997 to bolster his submission that the lodging of a caveat does not affect the priorities between parties or give the caveator any greater rights, it merely prevents transactions from taking place without the caveator having been given an opportunity to stop them or to otherwise exercise any rights he may have.
It is also undisputed that the bank has refused to release the title for townhouse no. 5. The bank relies on clause 4(n) in the instruments of mortgage which entitles it to retain the duplicate certificates of title issued in respect of the property and any and all documents relating to the title to the mortgaged premises at all times during the continuance of the security. Mr. Powell submits that the bank is the proprietor within the meaning of the Registration of Titles Act and has a legal interest in the property. He relied on Duke and others v Robson and others [1973] 1 All ER 481 for the proposition that where there has been no assertion of bad faith on the part of the bank as well as when the mortgagor contracts to sell the equity of redemption, this does not put the person with whom the mortgagor has contracted in a better position vis-a-vis the mortgagee and their power of sale than the mortgagor himself.
Lastly counsel submitted that there is no good reason to proceed to mediation as prior amicable discussions have broken down between counsel. The matter should proceed to summary judgment on its merits.
Mrs. Senior-Smith for the claimant responded first to the issue of whether this matter should proceed to mediation. She submitted that good faith negotiations have not been attempted and therefore the matter should be referred to mediation as required by the Rules.
On the issue of the status of the claimant as regards the bank, counsel argued that the claimant was a pre-payment purchaser within the meaning of the Real Estate (Dealers and Developers) Act. (“The Act”). The Real Estate Board having registered a charge on the title to the property under that Act.
Counsel also argued estoppel by conduct as the claimant's interest was protected by the Real Estate Board's charge. In support of this proposition she cited JMMB Merchant Bank Ltd (formerly Capital and Credit Merchant Bank Ltd) v Real Estate Board [2015] UKPC 16. Further, the purpose of the loan was not stated in the mortgage document therefore the bank's interest would not be protected by the proviso to section 31(5) of the Real Estate Dealers and Developer's Act.
In addition counsel submitted that the bank asserts priority as a mortgagee and demanded a payment in order to release the title to townhouse no. 5, where no document had been produced showing a charge per townhouse. This is unlawful as the bank cannot prove a specific charge per townhouse and is therefore estopped from making a demand for payment from the claimant. There is therefore a serious question to be tried. In all the circumstances the court should grant a conditional order in relation to the amended particulars of claim filed and if the court should treat the amendment as not being made then counsel sought an order to have the amended particulars of claim stand as filed.
In further submissions in response, Mr. Powell having reviewed the Real Estate (Dealers and Developers) Act argued that the proviso to section 31 (5) says that a financial institution shall have their charge rank pari passu and there must be construction of buildings or works. He argued that if the claimant is correct that the bank's charge did not rank pari passu with that of the Real Esate Board, its mortgage had not been extinguished. The charge registered by the Real Estate Board is in favour of the Real Estate Board not the purchaser and is therefore not exercisable by the claimant.
The court is guided by the following issues:
Whether the bank is entitled to retain the duplicate certificate of title to townhouse no. 5.
The bank pursuant to clause 4(n) of the mortgage instrument (which is re- produced below) set out clearly its entitlement to retain the duplicate certificate of title and other related documents in respect of the property.
“That the Bank shall be entitled and is hereby authorized to keep and retain the duplicate Certificates of Title issued in respect of the mortgaged premises and any and all documents relating to the titles to the mortgaged premises at all times during the continuance of this security, subject only to the production of the duplicate Certificates of Title at the request and expense of [NAHC] to the Registrar of Titles by the Bank to enable the endorsement thereon of any dealings or transactions affecting the mortgaged premises or otherwise which may be expressed to be subject and subsequent but not prejudicial to the security hereby created.”
It would seem to me that clause 4(n) as drafted entitles the bank to retain the duplicate certificates of title for the life of the security in respect of the mortgaged premises which is defined in clause 1 to include both land and buildings.
Fisher and Lightwood's Law of Mortgage says at para 3.69:
“It is advantageous for a mortgagee to have custody of the title deeds because the absence of the title deeds in the hands of the...
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