Patvad Holdings Ltd, Vivian Daley and Patricia Daley v Jamaica Redevelopment Foundation Inc. and Dennis Joslin Jamaica Inc.

• Jurisdiction: Jamaica
• Judge: McDONALD-BISHOP, J. (Ag)
• Judgment Date: 09 March 2007
• Judgment citation (vLex): [2007] 3 JJC 0902
• Court: Supreme Court (Jamaica)
• Date: 09 March 2007

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN CIVIL DIVISION

CLAIM NO. 2006HCV01377

BETWEEN

PATVAD HOLDINGS LIMITED

1 st CLAIMANT

AND

VIVIAN DALEY

2 nd CLAIMANT

AND

PATRICIA DALEY

3 RD CLAIMANT

AND

JAMAICAN REDEVELOPMENT FOUNDATION INC.

1 ST DEFENDANT

AND

DENNIS JOSLIN JAMAICA INC.

2 ND DEFENDANT

IN CHAMBERS

Mr. Peter Simmonds and Mr. Herbert Grant instructed by DunnCox for the Claimants.

Mr. Maurice Manning and Miss Tavia Dunn instructed by Nunes, Scholefield DeLeon & Co. for the Defendants.

INJUNCTIONS - Mortgage - Restraining of power of sale under mortgage

McDONALD-BISHOP, J. (Ag)

1 On October 2, 2006, I heard an application by the claimants for an interlocutory injunction to prevent the defendants from exercising a power of sale under a mortgage in respect of premises at 25 Seymour Avenue, Kingston 6 in the parish of St. Andrew. At the end of the hearing, I denied the application and gave an oral synopsis of my reasons for so doing. I promised then that I would reduce my reasons into writing at a later date. I now undertake to fulfill that promise.

2 The first claimant is a limited liability company registered under the laws of Jamaica with registered offices at 25 Seymour Avenue, Kingston 6 in the parish of St. Andrew. It is also the registered proprietor of the said premises. The second and third claimants are husband and wife respectively and the sole directors and shareholders of the first claimant. They also reside at 25 Seymour Avenue which has been their matrimonial home since 1987.

3 In or around August 1995, the second and third claimants secured a loan in the sum of $ 18.1m plus interest from the Capital Assurance Building Society (CABS) in order to liquidate a debt owed by the first claimant to the former Century National Bank (CNB). This loan from CABS was secured by a mortgage on 25 Seymour Avenue (the mortgaged property) dated April 1, 1996. The CNB loan was thus fully discharged.

4 They then secured an additional loan from CABS in the sum of $7m bringing their total indebtedness to CABS to $25.1m. The $7m was borrowed to discharge a mortgage in favour of Victoria Mutual Building Society (VMBS) and Island Life Merchant Bank (ILMB) that was held over another property, 18 Hopefield Avenue. This property was owned by the second claimant and a third party. It was the plan of the second claimant that 18 Hopefield Avenue was to be developed into town houses for sale and the proceeds used to liquidate the CABS loan of $25. 1m. This plan of the claimant was brought to the knowledge of CABS.

5 CABS later got into financial difficulties and its temporary management was assumed by the Ministry of Finance in or around February, 1998. There was then a transfer of CABS' debt portfolio to FINSAC or its subsidiary Refin Trust. Subsequently, by a Deed of Assignment dated January 30, 2002, this debt of $25.1m was assigned to the first defendant. The first defendant, therefore, became the mortgagee in respect of the mortgaged property. The second defendant is 'Loan Servicer' for the first defendant and is sued as its agent.

6 Following on a dispute between the parties and an attempt by the first defendant to exercise its power of sale in or around June 2004, a settlement was arrived at between the parties. This resulted in the signing of an Agreement to Restructure Existing Debt in December 2004 that was agreed to take effect as of October, 2004 (the Agreement). The claimants along with two other related companies signed as borrowers while the second and third claimants along with one of the said companies signed as guarantors of the loan.

7 By virtue of the Agreement, a supplemental mortgage was executed in respect of the said 25 Seymour Avenue to secure the principal sum of US$ 1,100,000.00. This mortgage was duly registered on 9th January 2006. There were thus two mortgages in favour of the first defendant in respect of the mortgaged property: the one registered April 1, 1996 in respect of which it was the assignee and the other, the supplemental mortgage registered January 9, 2006.

8 The claimants defaulted in repaying the loan on the terms and conditions stipulated in the Agreement and so the first defendant proceeded to take steps to exercise its power of sale. Consequently, by Notice of Application dated April 11, 2006, the claimants sought an injunction in the following terms:

"An injunction restraining the Defendants and each of them whether by themselves, their respective servants, agents, Directors, Officers or otherwise howsoever for a period of 28 days from the date of the order made herein from selling the First Claimant's property at 25 Seymour Avenue by Public Auction or otherwise and from taking any steps to enforce the said mortgagees numbered 924546 registered on the first day of April, 1996 as well as that mortgage registered on the 9th January, 2006 and numbered 1391672 in respect of the Mortgaged Property."

9 On April 11, 2006, an exparte interim injunction was granted pending an inter partes hearing. This injunction was subsequently extended by successive judges. On September 14, 2006 a condition was imposed by Rattray, J. that the claimants should pay a sum of U.S. $10,000.00 to the first defendant on or before the 25th September, 2006 by 4:00 p.m. failing which the application for interim injunction was to stand dismissed. The matter was then adjourned for October 2, 2006. The condition imposed by Rattray, J. was fulfilled by the claimants and so the matter came before me for hearing as to whether the injunction should be granted pending trial of the claim.

10 The claimants' case rests solely on the affidavits of the second claimant filed on April 11, 2006 and June 13, 2006 in support of the application and in response to the affidavit of Ms. Janet Farrow, Chief Executive Officer of the first defendant's Jamaican operations, dated June 2, 2006. Mr. Simmonds contended, on behalf of the claimants, that based on the remedies being sought as set out in their amended claim form dated July 10, 2006, an interim injunction is necessary to restrain the first defendant from exercising its power of sale.

11 In relying on the principles formulated by Lord Diplock in American Cyanamid v Ethicon [1975] 1 All E.R. 504 (American Cyanamid), he argued that the injunction ought to be granted because there are serious questions of law to be tried and that damages would not be an adequate remedy. He stated that on the balance of convenience, an injunction should be granted. According to him, the first defendant is a foreign company that would in no way be displaced or prejudiced if an injunction were to be put in place until trial. He argued that if the first defendant were to sell the property now, there is no guarantee that it would be around at time of trial to compensate the claimants, if the claimants were to be successful.

12 The application was strongly opposed by the defendants who, through their counsel, Mr. Manning, maintained that the circumstances do not fall within the realm for the grant of an injunction pending the determination of the matter. They relied on the affidavit of Ms. Janet Farrow dated June 2,2006 and on documents exhibited to the affidavits of the second claimant as showing the factual basis upon which the application ought to be denied. Mr. Manning argued that the claimants have not deponed to any facts that would support an application for an interlocutory injunction within the principles of American Cyanamid.

13 The general principles governing the grant of an interim injunction are, by now, well established following on the authoritative pronouncements of Lord Diplock in American Cyanamid. I consider it quite useful to illuminate the main planks of Lord Diplock's guidelines, which are set out seriatim.

• (i) The claimant need not establish a prima facie case but merely that there is a serious question to be tried on the merits. All that needs to be shown is that the claim is not frivolous or vexatious. Unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose that the claimant has any real prospect of succeeding in his claim for a permanent injunction at trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief.

• (ii) As to that [the balance of convenience], the governing principle is that the court should first consider whether if the claimant were to succeed at the trial in establishing his right to a permanent injunction, he would be adequately compensated by damages for any loss caused by the refusal to grant an interlocutory injunction. If damages would be an adequate remedy and the defendant would be in a financial position to pay them, then no interlocutory injunction should normally be granted, however strong the claimant's claim appeared to be at this stage.

• (iii) If, on the other hand, damages would not be an adequate remedy for the claimant in the event of him succeeding at trial, the court should then consider whether, if the injunction were granted, the defendant would be adequately compensated under the claimant's undertakings as to damages. If damages recoverable under the undertaking would be an adequate remedy, and the claimant would be in a financial position to pay them, there would be no reason on this ground to refuse an interlocutory injunction.

• (iv) It is where there is doubt as to the adequacy of the respective remedies in damages available to either party that the question of balance of convenience arises. According to Lord Diplock "it would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to...