Stewart Brown Investments Ltd v National Export Import Bank

• Jurisdiction: Jamaica
• Judge: Cor: Batts J.
• Judgment Date: 20 December 2019
• Court: Supreme Court (Jamaica)
• Docket Number: CLAIM NO. SU2019CD00482
• Date: 20 December 2019

[2019] JMCC Comm 39

IN THE SUPREME COURT OF JUDICATURE OF JAMAICA

CLAIM NO. SU2019CD00482

Between

Stewart Brown Investments Limited

Claimant

and

National Export Import Bank of Jamaica Limited (T/A Exim Bank Jamaica)

Defendant

Conrad George and Andre Scheckleford instructed by Hart Muirhead and Fatta for the Claimant

Nigel Jones and Kashima Moore instructed by Nigel Jones & Co. for the Defendant

Application for Injunction to restrain recovery of debt — Letters of Commitment — Loan Facility secured by Bills of Sale and Mortgages — Whether real issues for trial — Whether damages an adequate remedy — Application of Marbella principles.

IN CHAMBERS

Cor: Batts J.

1 The Claimant, by Notice of Application filed on the 5 ^th December, 2019, seeks the following relief:

• a. an interim injunction restraining the Defendant from taking any steps pursuant to its purported calling of the loan with respect to the loan facility provided to the Claimant by the Defendant and initially governed by the Claimants commitment letter of the 14 ^th November 2017 and subsequently amended (“the Loan Facility”) until the determination of proceedings.

• b. An interim injunction restraining the Defendant from enforcing any security with respect to the Loan Facility until the determination of the proceedings herein

• c. any further relief as this Honourable Court may deem fit.

2 The “Loan Facility”, to which the Claimant refers, was originally provided in or about the year 2017 and was subsequently amended on various occasions. Its purpose was to enable the Claimant to embark upon a contract with Noranda Jamaica Bauxite Partners II (the Noranda contract). The Claimant, at the time of entry into the loan facility, executed an assignment of the proceeds of the Noranda contract to the Defendant. The loan facility also included the provision by the Defendant to the Claimant of certain amounts as working capital. The loan facility was secured by, among other things, mortgages and guarantees secured by mortgages.

3 The approach of the court, when considering applications for an interim injunction, is now well established. The court must first be satisfied that there is a serious or real issue to be tried. Thereafter the court considers whether or not the applicant for the injunction can be adequately compensated in damages and whether the Respondent, to the application, is adequately protected by an undertaking as to damages. If damages are an adequate remedy, or if the respondent to the application is not adequately protected by an undertaking as to damages, an injunction is unlikely to be granted. This is because injunctive relief, at this interim stage, essentially means that a party is being precluded from doing what he would otherwise legally be entitled to do. He is being restrained prior to a judicial determination on the merits. There is really no justification for doing so if damages, at the end of the day, will adequately compensate the applicant for the injunction. If however there is doubt, as to the adequacy of damages, the court will consider whether the balance of convenience is in favour of the grant or refusal of the injunction. This phrase, “balance of convenience” used in American Cyanamid v Ethicon [1975] AC 396, was explained by the Judicial Committee of the Privy Council in National Commercial Bank v Olint [2009] UKPC 16 (28 ^th April 2009).

4 The injunction is an equitable remedy and, although discretionary, must be applied in accordance with established principles. One such principle has to do with the injuncting of a mortgagee's exercise of its powers of sale. The popularly termed “Marbella” principle is that, save in exceptional circumstances, the amount due is to be paid into court as a condition of the grant of an injunction preventing a mortgagee exercising powers of sale. The “exceptional circumstances”, and whether this case falls into any of them, will be a subject for consideration later on in this judgment. In this case, and this is common ground, the injunctive relief claimed will have the effect, inter alia, of preventing the Defendant's exercise of powers of sale as mortgagee.

5 It is the Claimant's case, as revealed in the Particulars of Claim and the several affidavits filed, that the Defendant has acted in breach of the loan facility. The Defendant, asserts the Claimant, wrongfully applied the proceeds of the Noranda contract to interest instead of to capital. This has resulted in an inaccurate statement of the account. Late fees and penalty interest have also been wrongly charged. The Claimant says further that the Defendant has wrongly alleged that it is delinquent. The Claimant contends that the Defendant agreed to new repayment terms contained in, “the amortization schedule”. The Claimant says payments have been made and accepted in accordance with the new terms.. The Defendant is in consequence estopped, or otherwise precluded, from asserting that the Claimant is in breach of the facility. The Claimant says further that Marbella principles have no application in this case as the Defendant's claim is manifestly in excess of anything that could be due. The Claimant asserts that it will suffer loss of goodwill and business reputation if the injunction is refused. This is because, the necessary consequence of the Defendant exercising its power of sale will be that, it will be unable to fulfil the Noranda contract.

6 The Defendant, on the other hand, asserts that it applied the Noranda proceeds to both principal and interest. However the earnings for that contract were less than anticipated and hence penal interest and charges accumulated. The facility has been amended several times and each time an amended letter of commitment was issued. They say there was no agreement to the proposed amortization schedule and that the Claimant at all times knew it had not been agreed. The Defendant contends further that, in breach of contract, the Claimant revoked the assignment of the Noranda contract. This resulted in the Defendant not accepting the proposed amortization schedule. The Defendant says this case does not fall within any exception to the Marbella principle.

7 I will state my decision with reference only to such of the evidence or the law as is necessary to explain my conclusion. I am grateful for the written and oral submissions provided. My failure to make detailed reference to them is reflective only of a desire to be concise. It bears emphasis that, at this interlocutory stage, I make no findings of fact nor am I required to. This is not a trial or an application for summary disposal of the matter.

8 The court's assessment, of whether or not there is a real issue to be tried, is based on an assessment of the evidence placed before it and the law on the matter. In this case the Claimant asserts that the terms of the contract required an application of the payments made to principal before interest. Reliance is placed on the words “interest will be calculated on the reducing balance” contained in the letter of commitment. The words quoted are to be found in the first letter of commitment dated 14 ^th November 2017 (Exhibit AB 1 to the affidavit of Alton Brown filed on the 5 ^th December 2019). They are also to be found in the amended terms, related to interest, in the most recent amended letter of commitment dated 19 ^th March 2019 and signed by the Claimant :

“Interest Rate

Interest will be charged at a rate of twelve percent (12%) per annum (“the principal rate”) under the Modernization Fund for Exporters loan facility and is calculated on the reducing balance. Unpaid principal interest instalments shall attract interest at a rate of nineteen percent (19%) per annum, commencing immediately after the date for payment until such time as...