Rosemarie Wright-Pascoe v Zoe Cecile McHugh and Others

• Jurisdiction: Jamaica
• Judge: SYKES J
• Judgment Date: 21 October 2011
• Judgment citation (vLex): [2011] 10 JJC 2101
• Docket Number: CLAIM NO 2010HCV 00024
• Court: Supreme Court (Jamaica)
• Date: 21 October 2011

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN THE CIVIL DIVISION

CLAIM NO 2010HCV 00024

BETWEEN

ROSEMARIE WRIGHT-PASCOE

CLAIMANT

AND

ZOE CECILE MCHUGH

FIRST DEFENDANT

AND

KES DEVELOPMENT COMPANY LIMITED (In Voluntary Liquidation)

SECOND DEFENDANT

AND

HUGH SCOTT

THIRD DEFENDANT

AND

ELESA SCOTT

FOURTH DEFENDANT

AND

JENNIFER MESSADO & COMPANY

FIFTH DEFENDANT

IN CHAMBERS

Nicole Foster-Pusey for the claimant

Gordon Robinson instructed by Patterson Mair Hamilton for the first defendant

Abraham Dabdoub instructed by Dabdoub and Dabdoub for the second defendant

Hugh Scott and Elesa Scott unrepresented (Hugh Scott in person)

Conrad George instructed by Hart Muirhead and Fatta for the fifth defendant

APPLICATION TO EXTEND TIME BY ANCILLARY DEFENDANT TO FILE DEFENCE - APPLICATION TO STRIKE OUT CLAIM AGAINST FIFTH DEFENDANT - STATUTORY TRUST UNDER REAL ESTATE (DEALERS AND DEVELOPERS) ACT - STATUTORY TRUST - WHETHER ATTORNEY AT LAW LIABLE AS ACCESSORY TO BREACH OF TRUST

SYKES J

1 [1] Dr. Rosemarie Wright-Pascoe is an annoyed and distressed woman. She has paid JMD$7,920,351.30 and USD$17,018.90 to Jennifer Messado and Company, a firm of attorneys, under a prepayment contract for a house which was to be built by KES Development Company (“KES”) on land owned initially by Mrs. Zoe McHugh. Eventually, the land was transferred to KES. The house has not been built; the builder of the house is now bankrupt and is in voluntary liquidation; and the firm of attorneys says it does not have the money because it was paid over to Mrs. McHugh and KES. The liquidator's report makes it clear that full recovery from the builder is not going to happen because the claims against the builder are greater than the known assets. Dr. Wright-Pascoe wants to recover her money and she has sued the five defendants.

2 [2] This unfortunate saga began in June 2005 when Dr. Rosemarie Wright-Pascoe signed two contracts: one with KES for the construction of the house and the other with Mrs. Zoe McHugh for the purchase of the land. The money was not handed directly by her to the other contracting party to any of the contracts. The only person who, without doubt, received the money is the firm of attorneys. The firm says it handed over the money to Mrs. McHugh and KES. Mrs. McHugh and KES say that they did not get the money from the firm. Mr. Hugh Scott and Mrs. Elena Scott were directors of KES at all material times.

3 [3] Mrs. Zoe McHugh is taking no chances. She does not know whether Dr. Wright-Pascoe will succeed against her. She is seeking contributions from her other co-defendants in the event she is held liable. To this end, she has filed what is known as an ancillary claim. There is a time limit within which the persons sued by Mrs. McHugh need to file a defence. KES has missed this deadline and now wants to get back on the field of play by applying to the court for permission to file a defence out of time. The firm of attorneys despite receiving the moneys, say it is not accountable to Dr. Wright-Pascoe and wants the yoke of the claim to be removed from its neck. It has filed an application to strike out the claim.

4 [4] Although not pleaded specifically by anyone so far, the submissions proceeded on the assumption that the contracts signed by Dr. Wright-Pascoe fall within the definition of prepayment contract as defined in the Real Estate (Dealers and Developers) Act (“REDDA”). This being so, the court will not have to determine whether these contracts are prepayment contracts as defined by the Act. The consequence of this is that moneys paid by a purchaser to a vendor of land under a prepayment contract governed by REDDA are tightly regulated. REDDA has set these contracts apart from ordinary conveyancing and construction contracts. The statutory regime has ousted the common law in so far as the statute has laid down the specific manner in which money paid under contracts governed by REDDA is to be treated.

Whether KES should be granted further time to file a defence to the ancillary claim

5 [5] KES has applied to extend time within which to file a defence to the ancillary claim. Mr. Gordon Robinson submitted that, based on the relevant rules of the Civil Procedure Rules (“CPR”), KES cannot be granted an extension of time within which to file its defence to the ancillary claim because KES has not complied with the rules relating to ancillary defendants. The provisions need to be set out and then examined to see if Mr. Robinson's thesis is sustainable.

6 [6] Rule 18.2:

• (1)An ancillary claim is to be treated as if it were a claim for the purposes of these Rules, except as provided by this part.

• (2)…

• (3)…

• (4)The following rules do not apply to ancillary claims-

  • (a) rules 8.14 and 8.15 (time within which a claim may be served);

7 [7] Rule 18.8:

• (1)A person against whom an ancillary claim is made may file a defence.

• (2)The period for filing a defence is the period of 42 days after the service of the ancillary claim.

8 [8] Rule 18.11:

• (1)This rule applies to an ancillary claim other than a counter claim if the ancillary defendant fails to file a defence in respect of the ancillary claim within the permitted time.

• (2)The ancillary defendant is deemed to admit the ancillary claim, and is bound by any judgment or decision in the main proceedings in so far as it is relevant to any matter arising in the ancillary claim; and

• (3)Subject to paragraph (4), if judgment under Part 12 is given against the ancillary claimant, he or she may apply to enter judgment against the ancillary defendant in respect of the ancillary claim.

• (4)The ancillary claimant may not enter judgment under paragraph (3) without the courts permission if the ancillary claimant-

  • (a) has not satisfied the default judgment under Part 12; or

  • (b) wishes to obtain judgment for -

    • (i) any remedy other than a contribution or any indemnity; or

    • (ii) a sum exceeding that for which judgment has been entered against the ancillary claimant.

• (5) The court may at any time set aside or vary a judgment entered under paragraph (2) if it satisfied that the ancillary defendant-

  • (a) applied to set aside or vary the judgment as soon as reasonably practicable after finding out that judgment had been entered;

  • (b)gives a good explanation for the failure to file a defence and

  • (c)has a real prospect of successfully defending the ancillary claim.

9 [9] Rule 26.1 reads:

• (1) The list of powers in this rule is in addition to any powers given to the court by another rule or practice direction or by an enactment.

• (2) Except where these Rules provide otherwise, the court may

  …

  • (d) extend or shorten the time for compliance with any rule, practice direction, or order or direction of the court even if the application for an extension is made after the time for compliance has passed.

10 [10] For Mr. Robinson, rule 18.11 (1) when read with rule 18.8 (2) means that the ancillary defendant, in this case KES, must file a defence within the 42 days after service of the ancillary claim. If this is not done, then the ancillary defendant is shut out and has to await the outcome of the main claim. Mr. Robinson continued by submitting that that makes perfect sense because the ancillary defendant's liability is contingent. His reasoning went like this: an ancillary claim is unique in that it is a contingent claim whose fate is determined by the outcome of the main claim. An ancillary claim is a claim by a defendant against other defendant(s) where the ancillary claimant is seeking a contribution from other persons in the event that he is found liable to the claimant. By filing an ancillary claim the defendant is saying he alone is responsible for the loss suffered by the claimant.

11 [11] Given the unusual nature of an ancillary claim, the submission continued, the ancillary defendant must follow the rules laid down by the CPR. Under the CPR, the ancillary defendant is given a limited time within which to file his defence and unless he does so time cannot be extended because the rules do not permit time to be extended in such circumstances. Once that door is closed the ancillary defendant cannot open it and has to await the outcome of the main claim. The reason for this according to Mr. Robinson is the contingent nature of an ancillary claim. Thus there is no need for the ancillary defendant to be let back in before the main claim is determined. If the claimant loses then there is no basis for the ancillary claim. Therefore, this is why under rule 18.11 (5) the court is empowered to set aside or vary the judgment entered against the ancillary defendant. According to Mr. Robinson, the logic here is that if the main claim fails there is nothing for the ancillary defendant to do whereas if the main claim succeeds then the ancillary defendant can set aside or vary in order to set aside the judgment entered against him.

12 [12] This position is not sustainable because, as Mr. Dabdoub pointed out, rule 18.8 does not in its terms or by necessary implication excludes the operation of rule 26.1 (2) (c). Rule 26.1 (2) (c), Mr. Dabdoub submitted is a rule of general application and this is why the opening words of that rule beings with the words “except where these rules provide otherwise, the court may” exercise the powers stated in rule 26.1. The rules do not have to provide the exception by specific words. The exception may arise by implication if the internal logic of a particular rule means that rule 26.1 (2) is excluded. The only rule specifically excluded in express words by rule 18.8 is rule 18.2 (4). The internal logic of rules 18.8 and 18.11 does not compel the conclusion that rule 26.1 (2) is excluded from operating. The reason for this is that rule 26 is a strong rule of strong general...