Maxine Sinclair v Jamaica Police Co-operative Credit Union
| Jurisdiction | Jamaica |
| Judge | Pettigrew-Collins J |
| Judgment Date | 26 April 2022 |
| Court | Supreme Court (Jamaica) |
| Docket Number | CLAIM NO. SU2021 CV 04104 |
and
[2022] JMSC Civ. 48
CLAIM NO. SU2021 CV 04104
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
IN THE CIVIL DIVISION
Application for interim injunction - exercise of the mortgagee's power of sale — Whether fraud and/or collusion on the part of mortgagee and purchaser — Sections 70, 71, 161, 105 to 108 of the Registration of Titles Act.
Miss Rechella McNeil instructed by McNeil and McFarlane for the claimant/applicant.
Ms Lavern Glave instructed by Scott Bhoorasingh and Bonnick for the first defendant.
Mr Philmore Scott and Mrs Camille Scott instructed by Philmore H. Scott and Associates for the second defendant.
The present application was filed on September 29, 2021 and is one for an interim injunction in the following terms:
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(i) The Claimant shall remain in possession of the property situated at 30 Davidson Avenue, Kingston 20 in the parish of St. Andrew, registered at Volume 1123 Folio 546 of the Register Book of Titles until the determination of the claim or such time as this Honourable Court deems fit; or
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(ii) The defendants be restrained by themselves, their respective agents and/or servants or otherwise, from instituting recovery of possession proceedings against the claimant until the determination of the claim or such time as this Honourable Court deems fit;
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(iii) The 2 nd defendant be restrained by herself, her agents and/or servants and/or otherwise from doing any and all acts, whether disposing, selling, mortgaging or transferring, in relation to the property registered at Volume 1123 Folio 546 of the Register Book of Titles.
The claimant filed a Claim Form and Particulars of Claim on September 29, 2021. On November 10, 2021, she filed an Amended Particulars of Claim. In her claim, she is seeking orders for the sale and conveyance of property previously owned by her which she still occupies, to be voided on the basis of collusion between the first and second defendants and/or fraud on their part. She is also seeking an order for the Registrar of Titles to be directed to cancel the transfer to the second defendant. She claims that the first and second defendants colluded in selling and purchasing her property at a gross undervalue. Further, that the first defendant was in breach of its duty in equity to the claimant for failing to obtain a proper valuation and failing to advertise or to advertise the property adequately.
In her Amended Particulars of Claim, she sets out the background to the claim. The first defendant is a registered financial institution and holds a mortgage in respect of property registered in the name of the claimant as well as her daughter Marie Hines who is now deceased. The mortgage was taken on October 9, 2012 in the sum of $5,525,000.00 in order to carry out repairs to the property. She said that in order to obtain the mortgage, a valuation was carried out and the value assigned to the disputed property in June 2012 was $6,000,000.00. She said she fell into arrears with the mortgage payments as at 2014 but that payments were nevertheless made subsequently.
She stated that Marie Hines died in August of 2020 and proof of death was provided to the first defendant. On the August 17, 2020, she received a letter from the first defendant advising her that the property had been sold and that she was required to vacate. A title search revealed that the property was sold to the second defendant who according to the claimant was at all material times an employee of C.D. Alexander Company Realty. A valuation of the property was carried out by C.D. Alexander Property Realty and the value then assigned to the property was $6,800,000.00.
It is contended that the second defendant became acquainted with the claimant and her family in or around 2014/2015 and became aware of the claimant's financial problems. It is alleged that the second defendant used the intimate knowledge of the claimant's financial circumstances in order to acquire the property at a price far below its market value. It is further alleged that the market value stated in the valuation report purportedly prepared by C.D. Alexander Company Realty is not the true or fair market value of the property but is as a result of the collusion and/or fraud on the part of the defendants.
The basis for saying that the valuation is fraudulent is that the claimant obtained a valuation report from Oliver's Property Services dated July 27, 2021 in the sum of $13,000,000.00.
The assertions above are taken from the Amended Particulars of Claim but are also reproduced in the claimant's affidavit in support of the interim injunction. In her affidavit, the claimant also deponed that she was advised that the loan was insured up to a minimum of $3,000,000.00. She said her daughter fell ill in late 2018 or early 2019 and she was unable to continue paying the mortgage. She said that when her daughter died in August 2020, she took proof of her daughter's death to the Credit Union (first defendant), as she was of the view that the entire loan was insured, based on the fact that she and her daughter were joint tenants and so the full arrears would have been paid up.
She also deponed that after she fell into arrears, she attended at the Credit Union and met with various persons and she was advised that she should continue paying the mortgage. She claimed that as at the time of her daughter's death, she continued to have discussions with the Credit Union personnel and she sought to no avail, to get an updated Statement of Account.
Regarding the second defendant, the claimant said that after she ran into difficulties, the defendant started showing interest in the property. She said that upon learning of the sale of the property, she challenged the sale price. She said she is now aware that the second defendant is seeking to sell the property for the sum of $13,000,000.00. She said despite her best efforts through her Attorneys—at-Law, she is still unable to get a statement of account from the Credit Union. She said that she had not received any notice from the Credit Union that the property had been sold and she never saw any advertisement in respect of the property.
The claimant accepts that the mortgage payments were in arrears for a period in excess of a month but denies that she was served with the statutory notice as required by Section 106 of the Registration of Titles Act (RTA). She contends that although a mortgagee does not owe a fiduciary duty to the mortgagor in the exercise of the power of sale, that position does not negate the mortgagee's duty to act in good faith. She commends to the court the case of Bruce James v Jamaica Money Market Brokers Merchant Bank Limited [2020] JMSC Comm 34(para. 45). She submitted that the actions of the first defendant amounts to bad faith and posited that on this basis, the court has the power to set aside a contract for sale with a third party due to lack of bona fides. Counsel cited the cases of Waring (Lord) v London Manchester Assurance Company Limited and Others [1935] Ch 310 and Cowell Anthony Forbes and Another v Miller's Liquor Store (Dist.) Limited [2016] JMCA Civ. 1. She also referenced Devon Morris and Others v JN Bank Limited and Others [2019] JMCC Comm 25 as a matter involving a finding of bad faith where the court granted an interim injunction upon determining that there are serious issues to be tried.
The claimant also relies on an excerpt from the case of Rudolph Daley v RBTT Bank (Jamaica) Limited unreported SC Claim No. 1995 D/162, to the effect that proof of an attempt to obtain the best possible price would include advertising the property and seeing to it that the property was properly described in the advertisement and that a critical measure of good exercise of the power of sale is whether a current valuation was obtained and that a failure to obtain same is evidence that there was a failure to take reasonable precaution to obtain the true market value of the property.
It is the claimant's further contention that the first defendant cannot escape liability by relying on the purported valuation figures in the 2018 valuation report in circumstances where more likely than not, the sale to the second defendant was by private treaty. The claimant acknowledged that the first defendant's power of sale did in fact arise but takes issue with the manner in which the power of sale was exercised; the main contention being that the property was sold at a gross undervalue. The further contention is that there are serious issues to be tried in relation to the allegation that the first defendant's conduct constitutes bad faith in the exercise of its power of sale.
On the question of whether damages are an adequate remedy, the submission is that it would not be for the claimant, given that the property in question is her family home which was gifted to her by her late father and which had been in the family for some fifty years. Further, it is where she resides and she would suffer grave hardship and homelessness if the second defendant is not restrained from evicting her. In the converse, she says that the second defendant does not reside at the premises and is in fact seeking to sell the property for the sum of $13,000,000, which is evidence that to the defendant, the property is merely an asset. She says therefore that damages would be an adequate remedy for both defendants.
The claimant urged the court to accept the observation in the case of Devon Morris as well as Tewani Ltd. V Kes Development Co. Ltd. V ARC Systems SC Claim No. 2008 HCV 02729, unreported judgment delivered July 9, 2008 that the common law presumption is that damages is not regarded as an...
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