Sanctuary Systems Ltd and Palmyra Properties Ltd v Dennis Hughes Constanzo and Others

• Jurisdiction: Jamaica
• Judge: Mangatal J:
• Judgment Date: 13 January 2011
• Judgment citation (vLex): [2011] 1 JJC 1301
• Court: Supreme Court (Jamaica)
• Date: 13 January 2011
• Docket Number: CLAIM NO. 2009 HCV 04344

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CLAIM NO. 2009 HCV 04344

BETWEEN

SANCTUARY SYSTEMS LIMITED

1 ^ST CLAIMANT

AND

PALMYRA PROPERTIES LIMITED

2 ^ND CLAIMANT

AND

DENNIS HUGHES CONSTANZO

1 ^ST DEFENDANT

AND

JOHNNIE WONG (aka) JOHN WONG

2 ^ND DEFENDANT

AND

KATHERINE ELAINE CONSTANZO

3 ^RD DEFENDANT

AND

MANGO MANOR LIMITED

4 ^TH DEFENDANT

AND

PACIFIC CROWN INT'L CO. LTD.

5 ^TH DEFENDANT

AND

HUANG CIANG-HE

6 ^TH DEFENDANT

Mrs. Sandra Minott-Phillips, Mr. Gavin Goffe, Ms. Ky-Ann Lee, and Mrs. Alexis Robinson instructed by Myers, Fletcher & Gordon, Attorneys-at-Law for the Claimants.

Mr. Maurice Manning and Ms. Anna Harry instructed by Nunes Scholefield De Leon & Co. for the 1 ^st and 4 ^th Defendants.

SUMMARY JUDGMENT- WHETHER NOTICE SUFFICIENT-BRIBERY-SECRET BENEFIT-BREACH OF FIDUCIARY DUTY

Mangatal J

1 The Claimants in this case are making a number of claims and seeking different types of relief which vary from Defendant to Defendant. The claim is for declarations, accounting, tracing, restitution, rescission, money had and received, damages and monetary compensation in respect of breaches of trust, confidence, fiduciary, statutory, contractual and common law duties owed to the Claimants, bribes, conspiracy, deceit, conspiracy to defraud, misrepresentation and unjust enrichment. The claims arise out of the development of the Palmyra Resort & Spa (‘the Palmyra’) in Montego Bay, St. James.

2 By a Notice of Application for Court Orders dated January 7, 2010, the Claimants seek an order for Summary Judgment against the 1 ^st Defendant ‘Mr. Constanzo’ and the 4 ^th Defendant ‘MML’ as follows:

• 1. Summary judgment is granted in favour of the Claimants as against the 1 ^st and 4 ^th Defendants on the Claimants' claim to a proprietary interest in the following money and property held by the 1 ^st and 4 ^th Defendants on their account and as established by the statements and/or admissions of the 1 ^st and /or 4 ^th Defendants and by way of equitable tracing, being:

  • (a) The sum of US $2,270,000 received by the 1 ^st Defendant (whilst a fiduciary of the Claimants) being an undisclosed loan from the 2 ^nd Defendant extended via the 5 ^th Defendant;

  • (b) The property registered at Volume 1392 Folio 140 of the Register Book of Titles being property acquired in the name of the 4 ^th Defendant at the instance of the 1 ^st , with money borrowed by the 1 ^st Defendant from the Claimants and ‘repaid’ with money the 4 ^th Defendant derived from ‘kickbacks’ to the 1 ^st Defendant out of monies paid by the 5 ^th Defendant, which the 4 ^th Defendant, as constructive trustee of the property for the Claimants, is hereby ordered to transfer forthwith to the Claimants or their nominee subject to the interest of the registered mortgagee, National Commercial Bank Jamaica Limited under mortgage #1555389 or, if sold under the power of sale, the subject of the transfer will be the net proceeds of sale in the hands of the mortgagee, said net proceeds of sale to be paid by the mortgagee directly to the Claimants in lieu of the transfer of the property. In the event the 4 ^th Defendant fails to execute the transfer of real property mentioned in this paragraph within seven(7) days of the date hereof, the Registrar of the Supreme Court shall execute the transfer of the real property to the Claimants or their nominee.

  • (c) All monies held in account number 23- 6F05-B at TD Waterhouse, Inc. in the name of the 1 ^st Defendant have been established by equitable tracing to be the property of the Claimants and it is hereby declared that the Claimants are beneficially entitled and are the owners of all sums in that account.

• 2. TD Waterhouse Inc. as the custodian of the funds in account number 23- 6F05-B now hereby declared to be the property of the Claimants, is hereby authorized and directed to transfer all funds from the said account at TD Waterhouse, Inc. to such account as may be specified by the Claimants solicitors in the Canadian proceedings supplemental to this action commenced in the Ontario Superior Court of Justice (Commercial List), being court file No. 09-8337-00CI.

• 3. Costs of this application to the Claimants for more than one attorney-at-Law to be paid by the 1 ^st and 4 ^th Defendants to be taxed if not agreed.

• 4. Special Costs Certificate granted.

3 The grounds upon which the Claimants seek summary judgment are stated to be as follows:

• 1. The 1 ^st and 4 ^th Defendants have no real prospect of successfully defending these issues.

• 2. The 1 ^st Defendant admits (and it is therefore not an issue) that, when employed, he understood that his existing contractual and fiduciary duties owed to PPL would be owed to both PPL and SSL once SSL was incorporated.

• 3. The 1 ^st Defendant states that he recommended the 2 ^nd Defendant to the Claimants to assist with the selection of a Chinese contractor for the Palmyra project.

• 4. Those selection services were in fact provided by the 5 ^th Defendant (through the person of the 2 ^nd Defendant)for a fee of US $5.55 M (paid to the 5 ^th Defendant by the 2 ^nd Claimant on Nov. 16, 2006) which company, in turn, ‘kicked back’ U$2.1.M to the 1 ^st Defendant 4 days later on Nov. 20, 2008(2006?).

• 5. The 1 ^st Defendant states in his Defence that he received a loan from the 2 ^nd Defendant in the sum of US $2,270,000 at 6% per annum.

• 6. The 1 ^st defendant does not aver that he received the informed consent of the Claimants to his receipt of that loan. He instead testifies that this fact was disclosed to the Claimants' Chairman, Mr. Robert Trotta, only in response to queries from Mr. Trotta, and that he (Constanzo) lied about the amount of the loan. He also states that this money went into the construction of the house on the land owned by the 4 ^th Defendant which he controls.

• 7. All the above evidences a bribe/secret payment made to the Claimants' fiduciary, Mr. Dennis Constanzo, of which receipt of US$2.27M is admitted by the 1 ^st Defendant.

4 I must at the outset express my gratitude to all Counsel, on both sides, for the extraordinary level of preparation and the thoroughness and lucidity of their submissions.

Brief Facts

5 The Claimants, ‘SSL’ and ‘PPL’ respectively, are the developers of the Palmyra.

6 Mr. Constanzo was the President of PPL and a director of SSL at the material time. He had responsibility for overseeing all aspects of the Claimants' activities in Jamaica, including the construction, sales and marketing of the Palmyra.

7 MML is a company registered in the British Virgin Islands and is the registered owner of the parcel of land registered at Volume 1392 Folio 140 of the Register Book of Titles upon which land is located Mango Manor Villa, where Mr. Constanzo resides when in Jamaica. Mr. Constanzo is the sole owner of MML.

8 The 2 ^nd Defendant ‘Mr. Wong’ was appointed the Claimants' consultant/agent to find and select a Chinese company to act as general contractor for the Palmyra. A company known as Shanghai COSCO was identified and recommended by both Mr. Wong and Mr. Constanzo and a contract for the construction of the resort was entered into. Mr. Wong, through the 5 ^th Defendant ‘PCI’, was paid US $5.55 M by the Claimants, through Shanghai Cosco for his assistance in the form of a finder's fee.

SSL and PPL 's Claim

9 In their written submissions, the Claimants' basic case is stated as being that Mr. Constanzo owed them fiduciary duties. They contend that Mr. Constanzo breached those duties by fraudulently persuading the Claimants to appoint Mr. Wong as a consultant and agent to provide the service of finding a suitable general contractor for the Palmyra, while concealing the fact that he had a previous business relationship with Mr. Wong, misrepresenting the identity of Shanghai COSCO, and conspiring to take secret payments to the detriment of the Claimants.

Mr. Constanzo and MML's Defence

10 Mr. Manning submitted that Mr. Constanzo has by way of his Defence filed on October 28, 2009, and by his 4 ^th Affidavit filed on October 6 2009, disputed the several allegations of conspiracy, collusion and fraud and amongst other matters, has in particular denied that he was in breach of any fiduciary duties to the Claimants. Mr. Constanzo has indicated that:

SUMMARY TUDGMENT PRINCIPLES

• a. Some of the sums he received from Mr. Wong that the Claimants complain about were loans.

• b. Mr. Constanzo and Mr. Wong explored and/or participated in ventures other than The Palmyra out of a spirit of entrepreneurship, and Robert Trotta was made aware of these ventures and of funds Mr. Constanzo received from Mr. Wong in respect of these ventures. Further, Mr Trotta was invited to participate and actually did contemplate participating in a number of these ventures.

• c. Mr. Constanzo actively ensured that Shanghai COSCO only performed those works which it had contractually undertaken to do, and even awarded some of those works which Shanghai COSCO had contractually undertaken to perform to other contractors where that course of action was in the best interests of the Claimants;

11 Rule 15.2 (b) of our Civil Procedure Rules ‘the CPR’, which provides the test for determining whether a Court ought to enter summary judgment against a Defendant states that ‘The Court may give summary judgment on the claim or on a particular issue if it considers that the defendant has no real prospect of successfully defending the claim or issue.’

12 The meaning of ‘real prospect of success’ was considered by the House of Lords in Swain v. Hillman [2001] 1 All E.R. 91, where, at page 92(j), Lord Woolf MR indicated:

The words ‘no real prospect of succeeding’ do not need any amplification, they speak for themselves. The word “real” distinguishes fanciful prospects of success or,…..,, they direct the...