Pan Caribbean Financial Services Ltd v Robert Cartade and Others

• Jurisdiction: Jamaica
• Judge: SMITH JA , HARRISON JA , DUKHARAN, JA
• Judgment Date: 19 February 2011
• Judgment citation (vLex): [2011] 1 JJC 2802
• Court: Court of Appeal (Jamaica)
• Docket Number: SUPREME COURT CIVIL APPEAL NO 112/2008
• Date: 19 February 2011

JAMAICA

IN THE COURT OF APPEAL

BEFORE:

THE HON MR JUSTICE SMITH, JA

THE HON MR JUSTICE HARRISON, JA

THE HON MR JUSTICE DUKHARAN, JA

SUPREME COURT CIVIL APPEAL NO 112/2008

SUPREME COURT CIVIL APPEAL NO 115/2008

SUPREME COURT CIVIL APPEAL NO 116/2008

SUPREME COURT CIVIL APPEAL NO 117/2008

BETWEEN

PAN CARIBBEAN FINANCIAL SERVICES LTD

APPELLANT

AND

ROBERT CARTADE

1 ^ST RESPONDENT

AND

JACK KOONCE

2 ^ND RESPONDENT

AND

SHIRLEY SHAKESPEARE

3 ^RD RESPONDENT

AND

WESTERN CEMENT COMPANY LTD (IN RECEIVERSHIP)

4 ^th RESPONDENT

BETWEEN

JAMAICA REDEVELOPMENT FOUNDATION INC

APPELLANT

AND

ROBERT CARTADE

1 ^ST RESPONDENT

AND

JACK KOONCE

2 ^ND RESPONDENT

AND

SHIRLEY SHAKESPEARE

3 ^RD RESPONDENT

AND

WESTERN CEMENT COMPANY LTD (IN RECEIVERSHIP)

4 ^TH RESPONDENT

BETWEEN

NATIONAL INVESTMENT BANK OF JAMAICA LTD

APPELLANT

AND

ROBERT CARTADE

1 ^ST RESPONDENT

AND

JACK KOONCE

2 ^ND RESPONDENT

AND

SHIRLEY SHAKESPEARE

3 ^RD RESPONDENT

AND

WESTERN CEMENT COMPANY LTD (IN RECEIVERSHIP)

4 ^TH RESPONDENT

BETWEEN

ROBERT CARTADE

1 ^ST APPELLANT

JACK KOONCE

2 ^ND APPELLANT

SHIRLEY SHAKESPEARE

3 ^RD APPELLANT

WESTERN CEMENT COMPANY LTD

4 ^TH APPELLANT

AND

PAN CARIBBEAN FINANCIAL SERVICES LTD

1 ^ST RESPONDENT

AND

JAMAICA REDEVELOPMENT FOUNDATION INC

2 ^ND RESPONDENT

AND

NATIONAL INVESTMENT BANK OF JAMAICA LTD

3 ^RD RESPONDENT

CIVIL PROCEDURE - Claim - Application to strike out - Amendment of pleadings - Civil Procedure Rules 2002, r. 26

SMITH JA

1 I have had the benefit of reading in draft the judgment of my brother Harrison JA and I agree with his reasoning and conclusion.

HARRISON JA

2 These four appeals, which were consolidated by order of the court, have challenged orders made by Brooks J on 15 and 24 October 2008, whereby the learned judge refused to strike out a claim brought by Robert Cartade, Jack Koonce, Shirley Shakespeare and Western Cement Company Ltd (the respondents), granted the respondents' application to amend their claim forms and particulars of claim and had ordered that Pan Caribbean Financial Services Ltd, Jamaica Redevelopment Foundation Inc and National Investment Bank of Jamaica Ltd (the appellants) were entitled to have their respective costs taxed immediately in respect of the respondents' application to amend the claim form and particulars of claim.

The Background

3 Robert Cartade was a shareholder and investor in Western Cement Company Ltd (Western Cement), a company incorporated under the Companies Act of Jamaica. Jack Koonce and Shirley Shakespeare were also shareholders and directors of Western Cement. On 20 October 1995, a Consortium Loan Agreement (CLA) was entered into between Western Cement, Trafalgar Development Bank (TDB), Island Victoria Bank Ltd (IVB), Mutual Security Bank Ltd (MSB) and Capital and Credit Merchant Bank (CCMB) to provide loan facilities to Western Cement. Under the CLA, Western Cement received loans totaling US$1,941,000.00 and J$14,000,000.00 from the consortium of banks. The loan was guaranteed by Jack Koonce and Shirley Shakespeare. TDB was the lead bank in the consortium.

4 Under a mortgage clause in the insurance policies made pursuant to the CLA, TDB had authority to receive, apply and dispose of insurance proceeds payable to the consortium by Western Cement's insurers.

5 On 8 June 2002, Western Cement's kiln was damaged during torrential rains and lightning storms. The insurers AHI Co and West Indies Alliance Co were notified of the damage through brokers. Claims were submitted by Western Cement amounting to US $650,000.00 but AHI Co denied its claim. West Indies Alliance Co whilst denying liability decided however, to make an ex-gratia payment in the sum of US$325,000.00 in respect of the claim. By letter dated 18 June 2002, Western Cement wrote to TDB requesting that the consortium of lenders authorize the insurer to pay over the US$325,000.00 to it, so that repairs could be carried out to the kiln. Western Cement and its shareholders contended that the consortium of lenders was not entitled to receive payment since it was one that was made ex-gratia and not made pursuant to the insurance policy. By letter dated 24 June 2002, TDB replied to Western Cement as follows:

‘We refer to your letter dated June 18, 2007 regarding the above matter and the handling of the related insurance claim.

Please be advised that TDB on behalf of the lending consortium will not agree to the insurance company paying the proceeds of the claim directly to Western Cement Company Limited.

In our capacity as mortgagees the proceeds of the claim will be paid directly to TDB. You have our assurance that TDB will in turn disburse those proceeds expeditiously against invoices for the replacement of the kiln.’

6 On 1 May 2003, TDB and CCMB by virtue of a deed of assignment assigned to National Investment Bank of Jamaica Ltd (NIBJ), absolutely all their rights, title and interest under the debts. TDB was absorbed into Pan Caribbean Financial Services Ltd (PCFS). IVB and MSB had assigned their respective rights under the CLA to Dennis Joslin Jamaica, Inc. Jamaica Redevelopment Foundation Inc (JRF) eventually became the successor and assignee of the interests, rights, title and obligations of Dennis Joslin Jamaica Inc.

7 The damaged kiln was not repaired. Western Cement was unable to function and it was eventually put in receivership.

8 The respondents commenced an action in the Supreme Court on 16 August 2006 by filing a claim form and particulars of claim. The appellants were named as defendants in the claim. It was alleged that as a result of the appellants' breach of contract, Robert Cartade, Jack Koonce and Shirley Shakespeare suffered loss of or diminution in the value of their shareholdings in Western Cement. It was further alleged that Western Cement had suffered loss, damage and expense. On 15 September 2006, an amended claim form was filed.

9 On 21 November 2007, JRF filed an application for court orders and sought the following orders:

• ‘1. The Claimants' Statement of Case be struck out against the 3 ^rd Defendant;

• 2. The costs of this application and of the claim generally to date be paid by the 1 ^st , 2 ^nd and 3 ^rd Claimants to the 3 ^rd Defendant to be taxed if not agreed.’

10 NIBJ and PCFS also filed notices of application for court orders on 5 December 2007, and sought orders to strike out the claim on the ground that the respondents' statement of case, in so far as it purported to advance the claims of the 1 ^st , 2 ^nd and 3 ^rd respondents, revealed no reasonable grounds for bringing the claim against them. PCFS contended in the alternative, that the statement of case against it was an abuse of the process of the court.

11 The applications which sought to strike out the claim came before Brooks J, at a case management conference (CMC) on 28 April 2008, which lasted over a period of five days. During the hearing, an application was made by the respondents to amend the claim form and the particulars of claim. Brooks J made the following orders:

• ‘1. The applications by the 1st 2nd and 3rd Defendants respectively to strike out the Claimants' claim are refused;

• 2. The Claimants shall be at liberty to prepare, file and serve on or before 31st October 2008, an amended Particulars of Claim in terms of that appended to its amended notice of application for court orders filed July 22, 2008 with such further amendments as regards the issue of the Deed of Assignment as it deems necessary;

• 3. The Defendants shall be at liberty to respectively file and serve, on or before 17th November 2008 an amended Statement of Defence with or without a Counterclaim as they are respectively advised;

• 4. The Claimants shall be at liberty to file and serve replies and/or defences to counterclaims, if so advised, on or before 28 ^th November 2008;

• 5. The Claim by the Fourth Claimant may only proceed if there is filed on or before the 31st October 2008, either an undertaking to indemnify the Fourth Claimant for the costs it will incur in this claim and for any costs which it may be ordered to pay the Defendants herein or the consent of the Fourth Defendant's receiver for the claim to be prosecuted. In the event that neither the indemnity nor the consent is provided the Fourth Defendant's claim shall stand as struck out;

• 6. The Case Management Conference is adjourned to a date to be agreed between counsel and the Case Management Judge, being not later than the 16th December 2008;

• 7. Costs of the application to strike out, the application to amend the particulars of claim and the costs of and occasioned by the amendment shall be paid by the Claimants to the Defendants;

• 8. Special costs certificate granted.’

12 On 24 October 2008 Brooks J, made a further order which reads:

• ‘1. The Defendants are hereby granted leave to appeal this Order as well as the Order made on the 15 ^th of October, 2008.

• 2. Order 2 of the Order dated 15 ^th October, 2008 is hereby amended to insert immediately after the number 2008 in line 2 thereof, the words ‘a Further Amended Claim Form and’

• 3. The Order made on the 15 ^th of October, 2008 shall take effect on the 24 ^th of October 2008.

• 4. The Defendants shall be entitled to have their respective costs in respect of the Order made on the 15 ^th of October, 2008 taxed immediately.

• 5. Costs of today to the Defendants to be taxed if not agreed and the Defendants shall be at liberty to tax those costs immediately.

• 6. The Claimant is hereby granted leave to appeal in respect of Order 4 hereof.

• 7. Application for Stay of Action pending payment of costs is refused.

• 8. Application for Stay of Taxation pending appeal is hereby refused.’

Notice and Grounds of Appeal

13 JRF filed notice of appeal on 31 October 2008 and relied upon the following grounds in SCCA No 115/2008:

• ‘1. The Learned Judge erred in failing to assess separately the Claimants...