Rosh Developments Ltd v Cayjam Development Ltd

• Jurisdiction: Jamaica
• Judge: Sykes J
• Judgment Date: 06 October 2017
• Neutral Citation: [2017] JMSC Comm 27
• Docket Number: CLAIM NO. 2017CD00073
• Court: Supreme Court (Jamaica)
• Date: 06 October 2017

[2017] JMSC COMM 27

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

COMMERCIAL DIVISION

Sykes J

CLAIM NO. 2017CD00073

Between

Rosh Developments Limited

Claimant

and

Cayjam Development Limited

First Defendant

and

Proline Development Corp

Second Defendant

Conrad George and Andre Sheckleford instructed by Hart Muirhead and Fatta for the claimant

Clyde Williams for the first defendant

Keith Bishop instructed by Bishop and Partners for the second defendant October 5 and 6, 2017

EQUITABLE MORTGAGE, EXISTENCE OF — WHETHER LEGAL MORTGAGE PAID IN FULL

IN CHAMBERS

Rosh's declarations

1 Rosh Developments Limited (‘Rosh’) wants the court to declare that it is an equitable mortgagee with an interest in property in St Catherine. It also wants to declare that it has the right to exercise its power of sale which it claims it has under the equitable mortgagee between itself and Cayjam Development Limited (‘Cayjam’) and it also wants a declaration that it can exercise any other remedy that it may have. In addition to that Rosh wants it declared by this court that its interest in the property stands in priority to that of Proline Development Corporation (Proline). It is seeking an order, as well, that the Registrar of Titles be directed to cancel the discharge entered by Rosh which indicated that the mortgage it was owed was discharged.

2 Rosh claims that it lent US$3,770,000.00 to Cayjam. The loan was secured by legal mortgage over property in St Catherine. The mortgage was dated November 1, 2013. It is common ground that the interest rate was 25% per annum. There is no evidence that compound interest was ever applied in any circumstance. There is no evidence of capitalisation of the interest thereby creating a higher starting principal for each succeeding month if the interest was not paid in any given month.

3 At some point Cayjam wanted to sell the land. According to Mr Ravi Rochlani, who swore two affidavits on behalf of Rosh, consent was given for the sale provided that Rosh's mortgage was paid out. Mrs Jennifer Messado, one of Jamaica's, if not, the Caribbean's most experienced conveyancers with at least 35 years of practice, was engaged to act on behalf of Rosh and she was tasked by Mr Rochlani with the job of ensuring that all the sums payable on the mortgage was paid over. Rosh says that payments totalling US$4,650,000.00 were made. Rosh makes the claim that US$5,100,000.00 was the accurate sum owed on the mortgage. In effect, Mr Rochlani makes the unmathematical claim, since it was, clearly, not based on the rate of interest for the loan, that there was a shortfall of US$444,000.00.

4 Mr Rochlani states that he met with Mr Peterson, the principal of Cayjam, and discussed the shortfall. He makes the claim that both he and Mr Peterson agreed that an additional sum of US$350,000.00 was to be paid and that this sum was to be secured by the property in question. This, as the details will make clear, was arrived at after Proline's lawyers paid and Roch's lawyers received the sum identified as the total needed to pay off Cayjam's mortgage. There was even a document called a ‘Discharge of Mortgage’ signed by Rosh and witnessed by Rosh's lawyers in which Rosh acknowledged that the debt was repaid in full.

5 One of the flabbergasting features of this case is that Mr Rochlani swears that he knew that his own lawyer, Mrs Messado, and the lawyer for Proline, thought that sum actually owed was less than it actually was, that is to say, that he knew that when the lawyers agreed that the sum to be paid was US$4,650,000.00, he knew that that figure was incorrect. Based on the sum that was said to be owed the lawyers were adrift by US$450,000.00. Most rational persons would think that Mr Rochlani would have contacted his lawyer and point out the error. Oddly enough, he does not say that he contacted his own lawyer, the very experienced Mrs Messado, to query the calculations.

6 The court has read, reread and reread Mr Rochlani's two affidavits for any sign that he spoke to his own lawyer about her error. Neither affidavit has any such thing. Let not the court speak for Mr Rochlani. It is always better to hear from the deponent himself. At paragraphs 7 – 11 of his affidavit, dated January 30, 2017, in support of Rosh's fixed date claim form he has these words:

7

Jennifer Messado and Company was engaged to act as our attorneys to ensure that all the sums payable on our mortgage was (sic) in fact paid over. (emphasis added) 8. Payments were made in relation to the mortgage to our attorneys as follows … totalling …(US$4,656,000.00). 9. That based on my calculations what was due and payable to the claimant to clear the mortgage as at September 2014 was …(US$5,100,000.00). 10. However, I in the interest of ensuring that the claimant recovered the full amount due to it refused to sign the release and discharge and thereafter met with the principal Director of the 1st defendant Mr Howard Peterson. 11. I discussed the issue of the shortfall and after discussing same a lesser sum of [US$350,000.00] was agreed upon as the amount to be paid to clear the mortgage. It was further agreed that this balance was to be secured by the property. I am aware that this fact was eventually communicated to the attorneys who acted for the 2nd defendant in its dealings with the 1st defendant in relation to this property… (emphasis added)

7 Let us pause here to pick up another part of the narrative that explains how it is that Proline and Rosh are the protagonists with Cayjam sitting in the gallery. Mr Rochlani is short on these details. For that we turn to the affidavit of Mr Courtney Hamilton attorney at law. This affidavit is dated July 7, 2017. He tells us that he is the senior partner of the firm Hamilton and Hamilton and that he has the authorisation from Proline to swear to this affidavit. He states that Cayjam bought land registered at volume 987 folio 289 and became the registered proprietor. On or about November 1, 2013, Rosh was granted a mortgage over the same land by Cayjam in the amount of US$3,770,000.00. Cayjam was required to repay this mortgage on or before 90 days at 25% interest per annum. He adds, and this is not disputed, that Mrs Messado of Jennifer Messado and Company was the attorney at law for Rosh.

8 At some point it was understood and agreed that Proline would repay the total mortgage as well as interest. In proof of this arrangement there is a letter dated September 20, 2013 from Mrs Messado to Mr Hamilton which states:

We understand that you act on behalf of the proposed lender to this development who would repay Mr Rochlani as per the signed legal mortgage document.

We hold the said duplicate certificate of title for the Lime Portmore lands for and on behalf of the mortgagee Mr Ravi Rochlani.

In order to bring you up to date we enclose the following regarding the amount payable to redeem the loan as follows:-

• 1. statement of account dated May 29, 2013 from Jennifer Messado & Co.,

• 2. notice – memorandum of monies owing on mortgage

This includes all the costs and expenses together with the principal sum in the amount of … $4,195,625.01.

9 Although there is no reference to United States of America currency in the letter it is common ground that the sum referred to was denominated in that currency. There is no evidence from Mr Rochlani that Mrs Messado did not have authority to enter into this final arrangement and surely within the ambit of her instructions she, exercising professional judgment, would be entitled to write this letter to give effect to the agreement.

10 According to Mr Hamilton, on May 1, 2014, there was a meeting at his chambers attended by Mrs Messado who still represented Rosh. Mr Howard Peterson of Cayjam was also present. The final figure agreed was US$4,650,000.00 and on the same day and date the sum of US$300,000.00 was given to Mrs Messado as a deposit. There is no evidence saying otherwise from Mr Rochlani.

11 According to Mr Hamilton, his calculation of interest on the initial loan of US$3,770,000.00 at 25% from November 1, 2013 through to May 1, 2014 assuming no interest was paid from the inception of the loan would be US$467,376.71 which would give a total balance (principal plus interest) of US$4,237,376.71. He says that the negotiated amount of US$4,650,000.00 was arrived at and it ‘covered any other additional fees or claims.’

12 He adds that on May 13, 2014 an undertaking was given for the balance of US$4,350,000.00. The letter from Mr Hamilton to Mrs Jennifer Messado begins with these important words:

Please accept our irrevocable undertaking to pay to your firm the amount of …US$4,350,000.00 on presentation of the original duplicate certificate of title … registered in the name of Cayjam Development Limited, together with the following:

• (a) letter of possession

• (b) copies of mortgage discharge documents

• (c) …

• (d) …

• (e) …

13 As is patent, Mr Hamilton and Mrs Messado were proceeding on the basis that they were making arrangements for Cayjam's mortgage to be paid off completely by Proline. Do recall that Mr Rochlani said he was aware of the error being made by Mrs Messado and presumably also by Mr Hamilton but Mr Rochlani does not say when he became of the error. But assuming it was before May 2014 why did he not speak to his attorney? Why would a rational businessman permit his lawyer to persist in an error that would see him underpaid by US$450,000.00? There is no evidence that he was not aware of these developments but in any event, Mrs Messado was his agent for the purposes of the transaction and so it really does not matter whether he knew minutiae.

14 There is a letter, dated July 10, 2014, from Mr Hamilton to Mrs Messado stating that he enclosed a cheque for US$3,660,000.00 as requested in Mrs Messado's email of July 3, 2014 and another cheque of...