Stewart Brown Investments Ltd v National Export Import Bank of Jamaica Ltd
| Jurisdiction | Jamaica |
| Judge | Laing, J |
| Judgment Date | 18 December 2020 |
| Court | Supreme Court (Jamaica) |
| Docket Number | CLAIM NO. SU2019CD00482 |
| Date | 18 December 2020 |
[2020] JMCC Comm 36
IN THE SUPREME COURT OF JUDICATURE OF JAMAICA
COMMERCIAL DIVISION
CLAIM NO. SU2019CD00482
and
(T/A) Exim Bank Jamaica)
Mr Stuart Stimpson instructed by Mr Conrad George and Mr Andre Sheckleford of Hart Muirhead Fatta, Attorneys-at-Law for the Applicant
Ms Kashina Moore instructed by Nigel Jones & Co, Attorneys-at-Law for the 1 st and 2 nd Defendants/Respondents
Contempt of Court — Factors to be considered — Committal order — Standard of proof — Whether mens rea required — Meaning of ‘wilful’ — Whether there needs to be proof that the party had an intention to act in contempt of Court
Civil Procedure — Whether order of a single Judge of the Court of Appeal can be amended or modified by a notice to parties — Whether such notice can be used as a tool to construe the meaning of an order
By Notice of Application filed on 2 nd September 2020 (“the Application”), the Applicant Stewart Brown Investments Limited (“SBIL”) seeks, inter alia, a declaration that National Import Bank of Jamaica Limited (“EXIM”), and its officer the 2 nd Defendant Ms Maria Burke are in contempt of Court for disobeying an order made in the Court of Appeal by the Honourable Miss Justice Hilary Phillips, JA on the 23 rd day of June 2020 (“the Order”).
SBIL also seeks an order that the 3 rd Defendant, Facilitation Access Services Limited is in contempt of Court for disobeying and/or assisting in the breach of the Order. The 3 rd Defendant has not participated in these proceedings, and references to submissions on behalf of the Respondents in this judgment is intended to be a reference to submissions in respect of the 1 st and 2 nd Respondents only.
The 4 th, 5 th and 6 th Respondents have not been served and the Court was advised that SBIL will not be pursuing an application for contempt proceedings in respect of those Respondents.
Disobedience of an order of the Court to refrain from doing a particular act or breach of an undertaking given to the Court is one of the three main forms of contempt of court. As it relates to civil contempt, the actual procedure on committal is spelled out in the Civil Procedure Rules (“CPR”). A superior Court of record, such as the Court of Appeal of Jamaica, has the power to punish contempt. That power is part of the inherent jurisdiction of the Court.
In the case of Gordon Stewart v Noel Sloley [2013] JMCA App 4 at paragraph 39 the Court of Appeal stated as follows:
“Section 2 of Part 53 clearly speaks to the court's general power to commit for contempt. As provided for in rule 53.10 (10)(1)(a), where the contempt is committed within the proceedings, an application for contempt can be made by a notice of application for court orders under Part 11 of the CPR as specified…”
In Stewart v Sloley (supra) the Court of Appeal confirmed that by operation of CPR 53.10 where a contempt was allegedly committed within proceedings in the Court, an application under that part for an order finding a party in contempt must be made by a notice of application and in any other case, by a fixed date claim form. In the claim before me, although the order which was allegedly disobeyed, originated in the Court of Appeal, it was within the proceedings which form a part of this claim, and accordingly this Court has the power to punish for contempt of Court if it finds that the allegation has been proved to the requisite standard. In any event, there is no dispute between the parties on these procedural and jurisdictional points.
In order to fully appreciate the context of the Application, it is necessary to take a brief examination of the law governing the underlying commercial transaction between the parties.
Under English law, a secured transaction can be defined as an agreement, which is usually accessory to a credit agreement, which grants the creditor a right relating to property. The purpose of this is to improve the creditor's chance of getting the loan repaid or of ensuring performance of the contract by the borrower. Such security may be possessory where the creditor takes possession of the subject matter of the security, or non-possessory. Secured transactions are therefore contractually based, and contract law principles will determine the validity and enforcement of these transactions. There is therefore good commercial sense, in a lender obtaining security over personalty in addition to a mortgage, by use of a debenture or bill of sale for example, in order to increase its chances of recovering the money which it lends.
In this case, it is noted that the loan facilities approved in favour of SBIL were to facilitate it acquiring trucks and equipment as well as working capital for the execution of a contract it had entered into with a bauxite company. Security for the facilities included personal guarantees supported by mortgages, unlimited guarantees, a debenture and bills of sale over equipment.
On default by a mortgagor the preferred remedy of the mortgagee is normally to obtain possession and then sell the mortgaged property because in most situations it will be the most valuable asset. The mortgagee will then deduct the amount of the mortgage debt due to him, together with any interest, and or costs, from the proceeds of sale and pay over the balance to the mortgagor. Where the lender also has security over personalty, for example plant equipment or motor vehicles, then its options are greater and the decision whether it will enforce the mortgage and/or other security which it holds, will vary depending on a number of circumstances in each case, and what it deems to be the most commercially viable course.
Ordinarily the purpose of an injunction is to preserve the status quo. In this case, SBIL was deemed to be in default of its loan agreement with EXIM and EXIM was in the process of attempting to exercise its power of sale under the mortgage. In such cases, special considerations apply in respect of the grant of an injunction prohibiting the mortgagee from exercising its powers of sale under a mortgage which it holds. This is because the Courts have developed special rules and procedures which govern the limitations to be placed on a mortgagee in such circumstances.
The general rule is that the Court ought not to interfere with a mortgagee's right to exercise his power of sale except where the sums claimed to be due are paid into court. In this jurisdiction, this general rule is commonly referred to as the “Marbella principle” and the requirement for payment imposed by the Court is referred to as “the Marbella Condition”. The reference to Marbella is derived from the case of SSI (Cayman) Limited et al v International Marbella Club SA (unreported), Court of Appeal, Jamaica, SCCA No 57/1986, judgment delivered 6 February 1987, which is the case considered to have settled the applicable principles and some exceptions. As a general rule, there is usually no such condition attached to the granting of an injunction which prohibits the holder of security under a bill of sale, from enforcing pursuant to the bill of sale.
In the case of National Commercial Bank Jamaica Limited & Another v Toushane Green [2014] JMCA Civ 19. At paragraph 34 the Court of Appeal found as follows:
There is no dispute that a bill of sale transfers property and chattels from the grantor to the grantee. In Johnson v Diprose [ [1893] 1 QB 512] Lord Esher MR stated that “a bill of sale” is a document given with respect to the transfer of chattels where possession is not intended to be given. The learned Master of the Rolls stated further that the bill of sale in that case, which had been executed in the form contained in the scheduled to the English Bills of Sale Act 1887 would give to the grantee an absolute right to the property in the goods assigned and a right to possession of them. However, the right to possession of them in that instance was circumscribed by certain conditions, which it is not necessary to mention here. Lord Bowen in that case stated that, as an ordinary rule, on a mortgage of chattels, the property passes to the mortgagee. Likewise, in Small Businesses Loan Board, [ (1964) 7 WIR 287] after a careful review of some of the relevant authorities Lewis JA, stated that though bills of sale may provide that possession is to accompany the transfer of ownership, in practice they are used where it is intended that position is to remain with the debtor. Implicit in this statement is a recognition that a bill of sale transfers ownership.
There is no challenge to the validity of the bills of sale in this case, which were duly stamped and registered/recorded. Johnson v Diprose and Small Businesses Loan Board v Reid both assert the right of immediate possession to goods which are the subject of a bill of sale.
EXIM formed the opinion that it was entitled to enforce its bills of sale as SBIL was in default of its loan obligations insofar as it had failed to make payments as required by the loan agreement and the bills of sale. EXIM asserted further, that SBIL had also failed to keep insured the vehicles and other security in which EXIM had an interest. Therefore, if there were these breaches, unless restrained, EXIM would have been fully entitled to take possession of the...
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