Rosseau et Al v National Commercial Bank Jamaica
E.244 of 1982
Emil George, Q.C., David Muirhead, Q.C. and Derek Jones for plaintiffs/applicants
R.N.A. Henriques, Q.C., and Allan Wood defendant/respondent
Injunction - Interlocutory injunction — Principles governing grant
Plaintiff applied for interlocutory injunction to restrain defendant bank from taking steps to prosecute a demand for repayment of loan to N.C.B. Properties Ltd. until the trial of the action. Agreement between plaintiff and defendant for sale of shares in company. A condition of exercising the option to buy the shares was to make the loan to the company — Defendant demanded repayment of loan before completion of the purchase of shares
Balance of convenience in favour of granting the injunction.
In this action the plaintiffs' principal claims are for:
- Specific performance of an agreement made on September, 1932 whereby the defendant agreed to buy shares in Memphis Catering Ltd. from the plaintiffs. 2. A declaration that a loan of $3,567,000.00 made by the, defendant to Memphis Catering: Ltd, on 3 September, 1982 is not, and shall not be, due and payable until and after completion of the said agreement by the defendant.
The statement of claim was filed on 10 February, 1983 but the defendant having entered an appearance on 29 December, 1982, has not filed a defence.
On 4 May 1983, the plaintiffs applied by summons for an interlocutory injunction to restrain the defendant “from: taking any steps to prosecute (a) demand for re-payment of the sum of $3,657,000.00 (sic) (Million) from N.C.B. Properties Limited (formerly Memphis (sic) Catering Ltd.) until the trial of (the) action.”
The facts upon which this application is based are not disputed. In August, 1982, the plaintiffs together owned and controlled all the 60,000 fully paid up and issued shares in Memphis Catering Ltd., having a nominal value of $1.00 each. By agreement in writing dated 27 August 1982, the plaintiffs granted to the defendant the option to purchase their shares by 10 September 1982. The option was duly exercised by the defendant on 3 September 1982, thus bringing into effect heads of agreement, which were scheduled to the option agreement and which became the agreement of the parties for the sale and purchase of shares.
Clause 1 of the agreement stated the purchase price to be $2,853,000.00 to be satisfied, on the exercise of the option by the issue by the defendant of a debenture or debentures in the single or aggregate sum of $675,730.00 and, on the completion date, by a further issue in the single or aggregate sum of $2,177,270.00. Clause 2 fixed 31 October 1982 as the completion date. The provisions of c1.3 are as follows:
“In addition to the provisions of Clause 1 above, the Purchaser shall on or before the 31st day of August, 1982:
(a) Make an interest-free cash loan to the Company in the amount of Three Million, Five Hundred and Sixty Seven Thousand ($3,567,000.00) to be utilized by the Company for the payment of existing liabilities of the Company.
(b) Assume full responsibility for the payment of all legal fees ….”
A debenture for $675,730.00 was delivered to the plaintiffs on 3 September and the loan was made to the company, Memphis Catering Ltd., on the day. At the request of the defendant, the plaintiffs changed the name of the company to N.C.B. Properties Ltd. on 15 October, 1982. The defendant did not complete the purchase of the shares on the completion date as agreed or at all hence the action filed on 16, December 1982. By letter dated 2 March 1983 a demand was made on N.C.B. Properties Ltd. for repayment of the loan with a threat of action to compel payment if this was not made by 10 March. Hence the application for the injunction.
It is not disputed that the defendant was legally obliged, as a condition of exercising the option to buy the shares, to make the loan to the company-an obligation which was duly performed, What is in dispute is the time when the loan is repayable. The plaintiffs contend that the loan is not repayable until completion of the purchase, the defendant, as beneficial owner of the shares in the company, would look to its new subsidiary for payment. The defendant contends that this was a loan repayable on demand and is repayable if demand is made before completion. There is evidence that the loan is entered in the defendant's books as a demand loan.
It was submitted for the plaintiffs that from the terms, of the agreement it must have been in the contemplation of the parties at the time the agreement was made that the date of completion would precede the calling in of the loan. Reference was made to particular clauses in the agreement in support of the submission. For the defendant it was submitted that the agreement does not expressly provide that the loan was not repayable before completion; that the basic agreement is for the sale of shores and how the purchase price is to be paid; that...
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