Mosquito Cove Ltd v Mutual Security Bank Ltd, National Commercial Bank (Jamaica) Ltd, Refin Trust Ltd and Jamaica Redevelopment Foundation Inc. Grange Hill Farms Ltd and Kenenth Francis v Mutual Security Bank Ltd, National Commercial Bank (Jamaica) Ltd, Refin Trust Ltd and Jamaica Redevelopment Foundation Inc.

• Jurisdiction: Jamaica
• Judge: HARRIS, JA , MORRISON JA: , BROOOKS, J.A. (Ag) , HARRIS, J.A.
• Judgment Date: 30 July 2010
• Neutral Citation: JM 2010 CA 114
• Judgment citation (vLex): [2010] 7 JJC 3013
• Court: Court of Appeal (Jamaica)
• Date: 30 July 2010

[2010] JMCA Civ 32

IN THE COURT OF APPEAL

BEFORE:

THE HON. MRS JUSTICE HARRIS, JA THE HON. MR JUSTICE MORRISON, JA THE HON. MR JUSTICE BROOKS, JA

BETWEEN

MOSQUITO COVE LTD

APPELLANT

AND

MUTUAL SECURITY BANK LTD

1 ^ST RESPONDENT

AND

NATIONAL COMMERCIAL BANK (JAMAICA) LTD

2 ^ND RESPONDENT

AND

REFIN TRUST LTD

3 ^RD RESPONDENT

AND

JAMAICA RE-DEVELOPMENT FOUNDATION INC.

4 ^TH RESPONDENT

BETWEEN

GRANGE HILL FARMS LTD

1 ^ST APPELLANT

AND

KENNETH FRANCIS

2 ^ND APPELLANT

AND

MUTUAL SECURITY BANK LTD

1 ^ST RESPONDENT

AND

NATIONAL COMMERCIAL BANK (JAMAICA) LTD

2 ^ND RESPONDENT

AND

REFIN TRUST LTD

3 ^RD RESPONDENT

AND

JAMAICA RE-DEVELOPMENT FOUNDATION INC.

4 ^{TH RESPONDENT}

BETWEEN

FRANCIS AGENCIES LTD

1 ^ST APPELLANT

AND

KENNETH FRANCIS

2 ^ND APPELLANT

AND

MUTUAL SECURITY BANK LTD

1 ^ST RESPONDENT

AND

NATIONAL COMMERCIAL BANK (JAMAICA) LTD

2 ^ND RESPONDENT

AND

REFIN TRUST LTD

3 ^RD RESPONDENT

AND

JAMAICA RE-DEVELOPMENT FOUNDATION INC.

4 ^TH RESPONDENT

William Panton instructed by Ripton Macpherson & Co for the appellants

Miss Tenneshia Watkins instructed by Vacclanna & Whittingham for Mutual Security Bank Ltd and National Commercial Bank (Jamaica) Ltd

No appearance for Refin Trust Ltd

Mrs Sandra Minott-Phillips and Mrs lexis Robinson instructed by Myers, Fletcher & Gordon for Jamaica Redevelopment Foundation Inc

INJUNCTIONS - Interlocutory injunction - Powers of sale of mortgagee - Assignment of debt - Discharge of injunction

HARRIS, JA

1 [1] I have read the draft judgment of my brother Morrison J A and I am in full agreement with his reasons and conclusions. I have nothing further to add.

MORRISON JA

2 Introduction

3 [2] These appeals are from the decision of Cole Smith J to order, in three separate actions brought against a mortgagee by mortgagors, as a condition of the grant in each case of an interlocutory injunction restraining the mortgagee from exercising its powers of sale, that the mortgagors should bring into court the amount claimed by the mortgagee to be due under the mortgages. All three appeals therefore give rise, yet again, to the question of whether the judge was correct in her application of the well known decision of this court in SSI (Cayman) Limited v International Marbella Club SA ( SCCA No. 57/1986, judgment delivered 6 February 1987] ["Marbella").

4 [3] The first named appellants in each of the appeals, Mosquito Cove Ltd, Grange Hill Farms Ltd and Francis Agencies Ltd, are all limited liability companies incorporated in Jamaica under the Companies Act. I will refer to them in this judgment as "Mosquito Cove", "Grange Hill Farms" and "Francis Agencies", respectively. Mr Kenneth Francis, who is in his own right an appellant in Civil Appeals Nos. 38 and 39, was at all material times a businessman and landowner, resident in the parish of Westmoreland. I will refer to him as "Mr Francis".

5 [4] The first and second respondents in all of the appeals are companies incorporated under the Companies Act and were at all material times bankers, carrying on business at various locations throughout the island of Jamaica. The third respondent is also a company incorporated under the Companies Act and the fourth respondent is a company incorporated in the state of Texas in the United States of America and registered in Jamaica as an overseas company under the provisions of the Companies Act.

6 [5] On 21 October 1997, the first respondent changed its name to MSB Limited and merged with the second respondent and, on 20 June 2002, various mortgages and other securities, among them mortgages given by Mosquito Cove, Grange Hill Farms, Francis Agencies and Mr Francis to the first respondent, were transferred and assigned to the second respondent. By an agreement dated 1 February 1998, the second respondent sold all its rights, title and interest in all its credit receivables to Recon Trust Ltd, a company incorporated under the Companies Act, and by an assignment dated 8 February 1998, several of these debts were assigned to the third respondent. By Deed of Assignment dated 30 January 2002, the third respondent assigned all its rights, title and interest and all interest and other monies due or subsequently to become due to it, to the fourth respondent. For the purposes of this judgment, it will only be necessary to refer again to the first, second and fourth defendants, as "MSB", "NCB" and "JRDF", respectively.

7 [6] Mr Francis is the principal shareholder and/or director of Grange Hill Farms and Francis Agencies, which are both, together with others, part of a group of companies said to be known as the Francis Group of Companies. It is alleged by JDRF, but denied by Grange Hill Farms, Francis Agencies and Mr Francis, that Mr Francis is also the principal shareholder and/or director of International Holidays and Development Company Ltd, to which I will refer hereafter as "International Holidays".

8 The mortgages

9 [7] The mortgages that have given rise to this litigation were all given to MSB as follows:

"(a) Mortgage no. 901323, registered on 18 October 1995 (on three properties), from Mosquito Cove, as guarantor, to secure the indebtedness of International Holidays to MSB, in the sum of US$890,000.00.

(b) Mortgage no. 763728, registered on 14 May 1993, from Mr Francis, as guarantor, to secure the indebtedness of Grange Hill Farms to MSB, subject to a limit of $1,000,000.00.

(c) Mortgage no. 840399, registered on 7 December 1994, from Mr Francis, as guarantor, to secure the indebtedness of Grange Hill Farms to MSB, subject to a limit $1,000,000.00.

(d) Mortgage no. 927953, registered on 23 April 1996, from Mr Francis, as guarantor, to secure the indebtedness of Grange Hill Farms to MSB, subject to a limit of $5,500,000.00.

(e) Mortgage no. 754924, registered on 11 March 1993, from Mr Francis, as guarantor, to secure the indebtedness of Francis Agencies to MSB, subject to a limit of $500,000.00."

10 The statutory notices

11 [8] By statutory notices dated 11 July 2002, JDRF notified Mosquito Cove, Grange Hill Farms, Francis Agencies and Mr Francis of its intention to sell the mortgaged properties under powers of sale contained in the mortgages listed above if default in payment on the mortgages should continue for a period of one month from the date of service of the notice. The amounts of money (inclusive of principal and interest) stated in the notices by JRDF to be owing in respect of the mortgages as at I July 2002 were as follows:

• (i) Mosquito Cove $30,384,854 and US$2,235,090

• (ii)Grange Hill Farms and Mr Francis $37,515,276

• (iii) Francis Agencies and Mr Francis $31,799,840

12 The Supreme Court actions

13 [9] In an action commenced by originating summons against all the respondents on 7 October 2002 (Suit No. E. 2002/565), Mosquito Cove sought declarations that its guarantee allegedly given to MSB on or about 2 October 1995 to secure advances made by MSB to International Holidays, as well as mortgage no. 901323 allegedly given by Mosquito Cove in support of the said guarantee are invalid, void and unenforceable. In respect of the mortgage, the reasons advanced by Mosquito Cove for its invalidity are that it was not signed by a director of the company and that it is in breach of section 54 of the Companies Act then in force and therefore unlawful. The basis of the section 54 point is that the mortgage given by Mosquito Cove to MSB was for the purpose of securing the guarantee of a loan made to International Holidays by MSB to enable that company to acquire shares in Mosquito Cove. By way of relief, Mosquito Cove in this action seeks a permanent injunction restraining JDRF from exercising its powers of sale under the mortgage.

14 [10] In an action commenced by writ of summons on 8 October 2002 (Suit No. C.L. 2002/G-086), Grange Hill Farms and Mr Francis, claim against the respondents for an account of what is due from the mortgagors under the mortgages listed at para. [6] (b), (c) and (d) above (showing the amounts charged for interest and penalties), damages for negligence due to the alleged breach by MSB and NCB of their fiduciary duties to Grange Hill Farms, Mr Francis and Francis Agencies, and a permanent injunction restraining JDRF from exercising its powers of sale under the mortgages. In this action, Grange Hill Farms and Mr Francis complain that MSB and NCB have used the "greater portion" of the loans given to the company "to credit the account of [International Holidays], in which the Plaintiffs have no share", have failed to render a full statement of account, despite having been requested to do so, and "have charged excessive interest rates, compounded interest and default rates of interest", as a result of all of which, Grange Hill Farms and Mr Francis dispute the amount claimed by MSB and NCB "and wish to have the matter tried by this honourable court".

15 [11] In an action also commenced by writ of summons on 8 October 2002 (Suit No. C.L. 2002/F-063), Francis Agencies and Mr Francis claim against the respondents for an account of what sums are due from the mortgagors under the mortgage listed at para. [6] (e) above (showing the amounts charged for interest and penalties), damages for negligence due to the alleged breach by MSB and NCB of their fiduciary duties to Francis Agencies and Mr Francis, and a permanent injunction restraining JDRF from exercising its powers of sale under the mortgage. The complaints of Francis Agencies and Mr Francis in this action are identical to those of Grange Hill Farms and Mr Francis in Suit No. C.L. 2002/G-086, save that in this action the plaintiffs also complain that they have not been served with a statutory notice in respect of...