Lookahead Investors Ltd v Mid Island Feeds (2008) Ltd and Others

• Jurisdiction: Jamaica
• Judge: Brooks Ja
• Judgment Date: 29 May 2012
• Neutral Citation: [2012] JMCA App 11
• Court: Court of Appeal (Jamaica)
• Docket Number: SUPREME COURT CIVIL APPEAL NO 69/2012 APPLICATION NO 101/2012
• Date: 29 May 2012

Between

Lookahead Investors Limited

Applicant

and

Mid Island Feeds (2008) Limited

1st Respondent

and

Jamaica Livestock Association Limited

2nd Respondent

and

Newport-Fersan (Jamaica) Limited

3rd Respondent

and

The Registrar of Titles

4th Respondent

[2012] JMCA App 11

SUPREME COURT CIVIL APPEAL NO 69/2012

APPLICATION NO 101/2012

JAMAICA

IN THE COURT OF APPEAL

INJUNCTIONS - Granting of - Whether trial judge erred in decision to grant injunction - Whether there was a serious question to be tried - Whether damages an adequate remedy - Balance of convenience

IN CHAMBERS

Brooks Ja

1 This is an application by Lookahead Investors Ltd, for the grant of an injunction pending the completion of an appeal from the decision of Sinclair-Haynes J made on 11 May 2012. In that decision, the learned judge refused an application for an injunction pending the trial of a claim brought by Lookahead, against the respondents herein. On 14 May 2012, Panton P granted a without-notice application for an interim injunction, pending the hearing of this application.

2 The main issue raised by the appeal is whether Sinclair-Haynes J, in arriving at her decision, erred in her analysis of the application before her. Before considering that issue, it is necessary to outline the events which led to the claim having been filed. Thereafter, I shall outline the relevant law and then consider the application in the context of the issue to be resolved.

The background to the claim

3 The claim has its genesis in an agreement for sale between Lookahead and the 1st respondent, Mid Island Feeds (2008) Ltd. By that agreement Lookahead was to purchase from Mid Island, a parcel of land situated at Newport East in the parish of Kingston. It is important to note that the land has a wharf thereon, which wharf abuts the Kingston harbour.

4 The agreement for sale was negotiated between November and December 2011 and was conditional on certain matters which concerned Mid Island alone. The first was stipulated in the document encompassing the sale agreement. It stated, at special condition 8 thereof, that Mid Island had to get the consent to the sale, of certain thirdparties, including RBC Royal Bank Jamaica Ltd (RBC) and another entity, Newport Mills Ltd. RBC held a mortgage in respect of the land but Mid Island was otherwise heavily indebted to RBC. Newport Mills is a company affiliated to Lookahead and is a creditor of a company affiliated to Mid Island.

5 The second condition required Mid Island's attorneys-at-law to certify that the pre-emption rights of a previous prospective purchaser, the 2 ^nd respondent, Jamaica Livestock Association Ltd (JLA), had been waived, had expired or otherwise no longer existed. That second condition was set out in correspondence between the attorneys-at-law for Lookahead and Mid Island respectively. The pre-emption right would, however, have also been contemplated by special condition 8, mentioned above.

6 The sale agreement with Lookahead was signed in triplicate by both parties but was not dated. Mid Island's attorneys-at-law sent a photocopy of the duly signed document to Lookahead's attorneys-at-law under cover of a letter dated 2 December 2011. In it they stated, in part:

‘We reiterate our undertaking to hold the [sale agreement] and funds [representing the deposit and further payment specified in the sale agreement] in escrow under our direction, and to procure that same are not used in any manner prejudicial to your client's interest unless we first certify to you that any pre-emption rights held by [JLA] over the property has [sic] been waived, has [sic] expired or no longer subsists [sic].’ (page 77 of Bundle 2 of the Record of Appeal)

Mid Island's attorneys-at-law retained the three originals of the signed document.

7 That undertaking was pursuant to and consistent with the basis on which Lookahead's attorneys-at-law had sent the document when it had been signed byLookahead. The covering letter sending the document and the cheque representing the deposit and further payment stipulated the undertaking on which they were sent. The undertaking included the following stipulation:

‘(c) to ensure that the documents and funds are held in escrow under your direction, and to procure that same are not used in any manner prejudicial to the Purchaser's interest unless you first certify to us that any preemption rights held by [JLA] over the property has [sic] been waived, has [sic] expired or no longer exists [sic].’ (pages 74 —75 of Bundle 2 of the Record of Appeal)

8 The expected release of the rights held by JLA was never secured. A deadline given to JLA, which was to have expired on 10 December 2011, had to be extended to 9 January 2012. Mid Island's attorneys-at-law kept Lookahead's attorneys-at-law abreast of developments as they occurred.

9 By letter dated 10 January 2012 Mid Island's attorneys-at-law informed Lookahead's attorneys-at-law that JLA had notified Mid Island of its intention to exercise its pre-emption rights. Attached to the letter were one copy of the signed sale agreement, duly marked as cancelled, and Lookahead's cheque for the deposit and further payment, which cheque had not been negotiated. The other two signed copies of the document were also marked as cancelled and sent, one each, to RBC and to Mid Island.

10 Lookahead was undaunted. First, its attorneys-at-law offered an increased purchase price, not on behalf of Lookahead but on behalf of a company related to Lookahead. The intention, no doubt, was to achieve a position that dissuaded JLA from exercising its rights of pre-emption. When that increased offer failed to attract MidIsland's attention, Lookahead lodged a caveat against the title for the land and threatened court action. Correspondence between the respective attorneys-at-law took place thereafter, in which each party justified its particular stance.

11 Meanwhile Mid Island continued with its transaction with JLA. As a result of that transaction an instrument of transfer of title to the land was lodged with the 4 ^th respondent, the Registrar of Titles. The transfer was in favour of JLA's nominee Newport-Fersan (Jamaica) Ltd (Newport-Fersan). Newport-Fersan is the 3 ^rd respondent to this application. The Registrar issued a notice, warning Lookahead of the application to have the transfer registered. Lookahead, therefore, filed the claim which has been mentioned above and applied for the injunction to prevent the transfer of the title.

12 It is to be noted that the caveat, lodged on 1 February 2012, asserted that Lookahead had an agreement for sale with Mid Island and had paid it US$750,000.00. A copy of the sale agreement was used to support the request for the caveat to be noted on the title. It bore no sign of the cancellation notation placed by Mid Island's attorneys-at-law.

13 When the claim came before Sinclair-Haynes J, the learned judge quite correctly refused to consider the agreement for sale until the document had been stamped. The document, when stamped, also bore no indication that the original document had been cancelled by Mid Island's attorneys-at-law. The documents respectively used for lodging the caveat and submission for stamping were photocopies of the saleagreement which was sent to Lookahead's attorneys-at-law before the cancellation had occurred. It is against that background that the submissions were made.

The applicant's submissions

14 Mr Hylton QC, on behalf of Lookahead, pointed to a number of factors which, he argued, made it plain that the learned judge erred in coming to her decision. He said firstly, that she used the wrong test in deciding the issue. As a consequence, he said, there was an arguable appeal. Learned Queen's Counsel then submitted that an arguable appeal should not be rendered nugatory by virtue of the refusal to grant an injunction. He pointed out that if the land were hereafter sold to a third party, Lookahead's appeal would be rendered nugatory, if at this stage the application for injunction were refused.

15 Learned Queen's Counsel argued that at ‘the heart of the claim is a dispute as to whether JLA has a valid enforceable pre-emption right against Mid Island and if so, [whether] they validly exercised it’. A number of points fell within the ambit of that submission, including the question of whether the land was included in the pre-emption rights and secondly whether the contract giving rise to the pre-emption rights was an illegal one.

The respondents' submissions

16 Messrs Braham QC, Shelton and Spencer, in their respective submissions, each stressed some aspects more than others but all argued that there was no arguable appeal, that the learned judge made no error which would warrant the full courtdisturbing her decision and that the circumstances of this case warrant the refusal of the application for an injunction pending appeal.

17 A principal plank of those submissions was that the escrow agreement was such that it prevented the sale of land agreement from coming into effect until the condition of the escrow had been satisfied. That condition not having been satisfied, counsel argued, there was no agreement for sale on which the claim for specific performance could be hung. They submitted that the claim is without merit as is the current application.

18 Counsel also pointed out that Lookahead consistently, from the beginning of the negotiations between the parties, through the signing of the agreement, the acceptance of the extension of the time to exercise the pre-emption rights and even receiving the notice of the exercise of the pre-emption rights, accepted that a valid pre-emption right existed. It cannot, they say, after the fact, seek to challenge the validity of those rights. Learned counsel also asserted that there was no foundation for the charge of illegality as advanced by Lookahead's counsel.

The...