Ocean Chimo Ltd v Kenneth Lewis

• Jurisdiction: Jamaica
• Judge: Edwards J.
• Judgment Date: 12 August 2014
• Neutral Citation: [2014] JMCC Comm 9
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. 2014 CD 00050
• Date: 12 August 2014

[2014] JMCC Comm 9

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

COMMERCIAL DIVISION

CLAIM NO. 2014 CD 00050

Between

Ocean Chimo Limited (In Receivership)

Claimant

and

Kenneth Lewis

Defendant

In Chambers

Oral Judgment

Edwards J.

1 In this particular case, the issue is a simple one of debt, a significant debt or to say it another way, a debt of significant proportion which is owed to the creditor (the RBC Royal Bank) and remains unpaid by the debtor (Ocean Chimo Ltd). The said debtor has now come before the Court, a Court of Equity, to seek to have the courtprevent the creditor from exercising its powers to realize its security for a period of time, which in the view of this court, is time for the debtor in fact to go fishing.

2 The Claim Form filed in this matter presents a Claim for accounting and for damages for breaches of duty of care, fiduciary duties and for an interlocutory injunction to prevent the defendant, who was appointed receiver by the creditor as the debenture holder, from selling the hotel, which is the sole asset of the debtor and which was mortgaged by the debtor as security for the loan.

THE APPLICATION

3 The Claimant's Ex-Parte Notice of Application for Court Orders is for an interim injunction for 28 days and for the provision of records regarding insurance claims made by the receiver as a result of an unfortunate fire at the hotel and for the receiver to produce an account of his fees. The Claimant is also asking for copies of all policies of insurance covering the hotel.

4 The grounds set out by the Claimant point to the announcement of the pending sale of the hotel (which I already pointed out was the Claimant's sole asset charged under the debenture deed) by auction and the fact that there is a challenge to the appointment of and the subsequent actions of the receiver under the Debenture. The Claimants have also brought collateral proceedings to challenge the lawfulness of the actions of the debenture holders in respect of the asset under the control of the receiver.

5 They claim that if the collateral proceedings succeed, it will enable them to, amongst other remedies, repossess the hotel as a continuing operation. I make no judgment in that regard. They also claim that if the present claim is decided in their favour, damages would not be an adequate remedy and if the hotel is sold they would lose their primary and unique asset.

6 In this application they have also asked to be excused from providing any undertaking as to damages but in their later submissions it was suggested that the two directors of the Claimant would give an undertaking as to damages for 28 days, the period of the interim injunction, if granted.

APPLICATION OF THE LEGAL PRINCIPLES

7 It is agreed that even in an application for an interim injunction, the principles outlined in theAmerican Cyanamid case ( American Cyanamid Co. v Ethicon Ltd. [1975] 1 ALL ER 504 [1975] 1 ALL ER 504 ) applies. The question the court would have to determine is firstly, whether there is a serious question to be tried; if the answer to that is yes then the court would go on to consider whether damages are an adequate remedy and where does the balance of convenience lie. In this application and in the claim, the matters referred are matters which touch and concern issues arising after the appointment of the receiver. There is no allegation made regarding the validity of the debenture or the validity of the appointment of the receiver who was appointed there under.

8 Even in the previous collateral claims made and referred to in submissions as background, there is no claim challenging the validity of the security document or the appointment of the receiver. There is nothing to suggest to the Court that the exercise of a...