S & T Distributors Ltd v CIBC Jamaica Ltd and Others

• Jurisdiction: Jamaica
• Judge: Sykes J (Ag)
• Judgment Date: 19 November 2004
• Judgment citation (vLex): [2004] 11 JJC 1901
• Court: Supreme Court (Jamaica)
• Date: 19 November 2004

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

IN COMMON LAW

SUIT NO. C. L. S 222 OF 1999

BETWEEN

S & T DISTRIBUTORS LIMITED

FIRST CLAIMANT

AND

S & T LIMITED

SECOND CLAIMANT

AND

CIBC JAMAICA LIMITED

FIRST DEFENDANT

AND

ROYAL AND SUN ALLIANCE (Formerly known as West Indies Insurance Company)

SECOND DEFENDANT

IN CHAMBERS

Miss Carol Davis for the claimants

Mr. John Vassel QC and Miss Shena Stubbs instructed by DunnCox for the first defendant

Mr. Conrad George instructed by Hart, Muirhead and Fatta for the second defendant

CIVIL PROCEDURE - Court Orders - Notices of application - Res judicata - Issue estoppel - Abuse of process - Implied terms

Sykes J (Ag)

1 RES JUDICATA, ISSUE ESTOPPEL, ABUSE OF PROCESS AND IMPLIED TERM

2 1. The issues raised in these applications are not intelligible unless one has recourse to the history of litigation that came in the wake of a fire at the premises of the claimants located at 56 Brentford Road, Cross Roads, Kingston. The fire occurred on July 17, 1993. This is at least the fifth suit in these courts concerning various claims and counterclaims arising from the fire.

3 2. The first application is by the claimants who are seeking to have Suit No. 222/1999 restored. This claim was struck out against Royal and Sun Alliance (formerly known as West Indies Insurance Company and hereafter called Royal) on July 11, 2002. The claimants are relying on the fact that the striking out was irregular because they were not served with notice of the hearing. The second application is made by CIBC Jamaica Limited (CIBC) to have claimants' case in contract struck out. CIBC are seeking relief on the grounds that

• a) the case of the claimants amounts to an abuse of process; or

• b) it is likely to obstruct the disposal of the proceeding; or

• c) there is no reasonable cause of action; or

• d) the claimants have no real prospect of success

4 The history

5 3. In reading this history, it is important to bear in mind that these were happening simultaneously or in close proximity to each other.

6 i. Suit No. C.L. S. 206/94 (the insurance claim) and Suit No. C.L. W 318/94 (the recovery suit)

7 4. The two claimants, S & T Distributors Limited (STD) and S & T Limited (S & T), are companies registered under the Companies Act in Jamaica. The driving force and moving spirit behind the companies is Mr. Anthony Simmons. He describes himself as the managing director of both claimants.

8 5. The claimants, for business purposes, obtained loans from CIBC. CIBC demanded and received amour-plated security. CIBC had a mortgage that included a power of sale. CIBC also required the claimants to have adequate insurance and then endorse on the policies CIBC's interest. The effect of these arrangements was that CIBC had a power of sale over 56 Brentford Road as well as a right to the proceeds of the insurance policies in the event that the risks insured against occurred.

9 6. We now know that there was a fire in July 1993. The mortgage was still outstanding at the time of the fire. The claimants asked Royal to honour the claim. Royal not only resisted the claim but also laid a most grievous accusation at the feet of Mr. Simmons. Royal alleged that Mr. Simmons burnt down the premises and was trying to line his pockets from, what would be, even on the most delicate interpretation, a criminal act.

10 7. Royal, at some point, made two interim payments to CIBC. The claimants were stung by these accusations and filed suit against Royal and Graham Miller & Company Jamaica Ltd. This was Suit No. C.L. S 206/94. Graham Miller is not important to these applications. Nothing further will be said about this company.

11 8. In Suit No. C.L. S 206/94 (the insurance suit) the claimants were seeking to get the monies due under the insurance policies. Royal filed Suit No. C.L. W 318/94 (the recovery suit) against the claimants in which it sought to recover the interim payments that it had made to CIBC.

12 9. Both actions were consolidated. The trial began in February 1996. Judgment was delivered in January 1998. Langrin J (as he was at the time) found for the claimants. They recovered the money under the policies of insurance. The money recovered under the policies went straight into the coffers of CIBC, the mortgagees. By the time Langrin J delivered judgment, the insurance proceeds did not cover the outstanding mortgage payments.

13 10. The judge found that there was no fraud committed by Mr. Simmons. He found that Royal's case came down to this: Mr. Simmons was on the premises at the time of the fire, there was no evidence of any person entering or leaving the premises, therefore he must have set the fire. This is a textbook case of the because-this-therefore-that fallacy. Royal's suit against the claimants was dismissed.

14 ii. The arbitration and Suit No. W. 321/1994

15 11. The claimants say that after the fire, given that CIBC's interest was endorsed on policies they (the claimants) could not act independently to prosecute the settlement of the insurance claims. They needed the cooperation of CIBC. In an effort to settle the claim as quickly as possible, CIBC was prompted by the claimants to enter into arbitration. It is not clear who were the parties to this arbitration. CIBC, the claimants allege, was a reluctant participant in this exercise and only agreed to do so when the claimants agreed to pay what was, in the context of a burnt out business that was not earning revenue, the princely sum of $350,000. Only $200,000 was in fact paid.

16 12. The arbitration began in July 1994, one year after the fire, and ended abruptly in 1994. The reason for this unexpected end of the arbitration was that Royal filed Suit No. C.L. W 321/1994 which formed the basis for it to be granted an injunction stopping the arbitration proceedings. The claimants allege, in the suit before me, that since that time CIBC's conduct has been one of studious and meticulous inactivity. The claimants say that CIBC failed to appeal against the injunction. Suit No. C.L W321/1994 never emerged from the barn door. It is still in deep slumber. It was never pursued by Royal. This aspect of the case will be dealt with in more detail when I come to consider CIBC's application at paragraphs 56 – 66.

17 iii. Suit No. 23 of1996 and the injunction

18 13. Apparently, by late 1995 or early 1996 CIBC indicated its intention to sell the property. On February 1, 1996, STD filed Suit No. C.L. S. 23 of 1996 against CIBC to prevent it from selling the mortgaged property. This was eighteen days before the trial insurance and recovery suits began. The injunction was granted on April 15, 1996. By this time, the trial of the consolidated suits began. The injunction was discharged by the Court of Appeal.

19 14. CIBC applied to strike out the cause action for failing to disclose a reasonable cause of action. The action was struck out on July 11, 2001. No complaint is made about this striking out by STD. S & T was not a party to the suit.

20 iv. the current suit

21 15. What the claimants did was file another suit. This is Suit No. C.L.S. 222 of 1999 in which STD and S & T are the claimants and CIBC and Royal are the defendants. It is this suit that Royal struck out. Both claimants wish to have it restored. CIBC is now applying for a striking out of those parts of the claim that rest upon contract.

22 The claimants' case against Royal

23 16. Miss Davis makes the case against Royal in this way. Royal wrongfully denied liability on the insurance policies. It accused Mr. Simmons, the managing director of both companies, of arson and fraud. This was not established. The lack of a proper and reasonable basis for the allegation of fraud and arson was known to Royal from the outset. Had it not engaged in this delaying tactic; had it not interrupted the arbitration in 1994, in all probability the insurance claims would have been resolved earlier. The settlement would have occurred at a time when the insurance policies would have covered the outstanding mortgage. Royal's behaviour increased the risk of the claimants losing the property because the mortgage charges were accumulating. Because the insurance money had to be extracted from Royal by judicial pronouncement, the claimants, by then, were exposed to at least three years of additional mortgage payments which would have been avoided had the arbitration been allowed to run its course. The claimants say that this amounted to the tort of negligence which became actionable when the property was sold.

24 The claimants' application to set aside order made on July 11, 2002

25 17. STD says that because it was not served with the notice of proceedings of July 11, 2002, the striking out was irregular and so as a matter of right their action ought to be restored. Royal resists this on three grounds. It says that

• a) the STD has delayed unduly and any attempt to resurrect the matter would amount to an abuse of process and in any event Royal could now apply to have the matter struck out for want of prosecution, if it had been not been struck out before,;

• b) res judicata applies;

• c) the cause of action is now statute barred; and

• d) the claim does not disclose any reasonable cause of action.

26 18. There is no dispute that STD was not properly served. What happened was this: STD, in June 2002, had terminated the retainer of the firm of Clough, Long and Company. It had retained Nunes, Scholefield, Deleon and Company. Nunes had filed a notice of change of attorney on June 7, 2002. There is no evidence that this change of attorney was served on Royal's lawyers. Mr. Ruel Gibson, who was a legal clerk employed to Hart, Muirhead and Fatta and the process server, on July 10, 2002, (a mere one day before the summons was heard) attended...