Junkanoo Estates Ltd v UBS (Bahamas) Ltd

• Jurisdiction: Bahamas
• Judge: Mr. Justice Jon Isaacs, JA
• Judgment Date: 11 August 2020
• Neutral Citation: BS 2020 CA 96
• Court: Court of Appeal (Bahamas)
• Docket Number: SCCivApp No. 24 of 2018
• Date: 11 August 2020

IN THE COURT OF APPEAL

Before:

The Honourable Mr. Justice Isaacs, JA

The Honourable Madam Justice Crane-Scott, JA

The Honourable Mr. Justice Jones, JA

SCCivApp No. 24 of 2018

Between

Junkanoo Estates Ltd

First Appellant

and

Yuri Starostenko

Second Appellant

and

Irina Tsareva-Starostenko

Third Appellant

and

UBS (Bahamas) Ltd

(In Voluntary Liquidation)

Respondent

APPEARANCES:

Mr. Philip Lundy, Counsel for the First Appellant

Mrs. Yvette McCartney Meredith, Counsel for the Second Appellant

Third Appellant Pro Se

Mr. Marco Turnquest, with Ms. Chizelle Cargill, Counsel for the Respondent

American British Canadian Motors Ltd. v. Imperial Life Assurance Co. of Canada [1991] BHS J. No. 129 considered

Colinaimperial Insurance Company Limited v Bethel and another [2011] 2 BHS considered

Fourmaids Ltd v Dudley Marshall (Properties) Ltd [1957] 2 All ER 35 considered

Junkanoo Estate Ltd and others v UBS Bahamas Ltd (In Voluntary Liquidation) [2017] UKPC 8 considered

National Westminister Bank Plc. v Skelton [1993] 1 All ER 242 considered

Regina v Mackle (Patrick) [2014] A.C. 678 considered

Western Bank Ltd v Schindler [1976] 2 All ER 393 considered

Civil Appeal — Mortgage — Mortgagee's action for possession — Basis for resisting a mortgagee's summary application for possession — whether the Court of Appeal has discretion to, in the interest of justice, vacate the Summary Judgment Order made — concessions made by counsel

The appellants were granted a mortgage with the respondents. At some point after the agreement between the parties, the appellants defaulted on the agreement and the respondents began an action in the Supreme Court seeking inter alia an order for the possession of the property. On application by the respondents summary judgment was granted for the debt claimed and for possession in default of payment. The appellants were granted leave to appeal that decision by the learned judge on the point of “… whether the Court of Appeal has discretion to, in the interest of justice, vacate the Summary Judgment Order made herein on 23 March 2015…”.

Held: appeal dismissed; costs to the respondent to be assessed, if not otherwise agreed.

The appellants were represented by Counsel when they entered into their bargain with the respondent. They do not appear from their correspondence with the respondent and the respondent's Counsel, and from the arguments marshaled by the pro se appellant to be mere babes in the woods in the world of financial affairs. It is unlikely in my view, therefore, that even without the benefit of Counsel they would have been able to sustain a credible argument that the respondent took advantage of their inexperience and naivety.

A court may be sympathetic to a party who has made a concession if it is shown that the concession was made as a result of a mistake of law. The difficulty faced by the appellants however, is that it is nowhere pleaded in their defence or counterclaim that the concession made by Mr. Mackay was wrong in law. In fact it was only because he was satisfied that the law was not with him that he conceded his position.

I set at naught the absence of the appellants from the hearing before Evans, J. They were represented by Mr. Mackay who was present and who for all intents and purposes guarded their interests as best he could when faced with formidable odds and an insurmountable submission.

I am satisfied that whatever relief the appellants seek must be found elsewhere than from the respondent. In the premises I would answer the question posed in the affirmative; but with a caveat. The caveat is that the applicant would have to demonstrate a strong balance of probability case that the Court should interfere. Nevertheless, my positive finding is of no avail to the appellants as there has been no basis shown for this Court to interfere with the decision made by Evans, J.

Ultimately, the appellants claim against the respondent sounds in damages; and their counterclaim against the respondents remains in the court below awaiting determination. Should the appellants prevail on their claim, damages will be assessed based on such provable losses as they are able to show.

Mr. Justice Jon Isaacs, JA

Judgment delivered by the Honourable

1 On 17 March 2020 we heard the parties' submissions; and reserved our decision. We render it now.

Background

2 A snapshot of the history of this appeal is provided by Lord Sumption at paragraphs 2 to 4 of his judgment delivered on 3 April 2017 in Privy Council Appeal No 0052 of 2016, hence I gratefully reproduce them here:

• “2. The application arises out of a mortgagee's action for possession of a residential property at Lyford Cay in the western district of New Providence in the Commonwealth of the Bahamas belonging to the First Defendant, Junkanoo Estates Ltd. The mortgage was granted by Junkanoo to secure its indebtedness under an agreement with UBS (Bahamas) Ltd contained in a Commitment Letter dated 23 August 2011. The Second and Third Defendants, Mr and Mrs Starostenko, control Junkanoo and guaranteed Junkanoo's indebtedness. They also occupy the property, together with their family. Under the Commitment Letter, UBS provided a credit facility of $1.4m to the company on terms that at least half of the facility would be available for investment in securities through trading facilities to be made available by UBS. On 28 February 2014, UBS declared the loan in default and demanded repayment of the whole outstanding balance. The alleged defaults were the failure of Junkanoo to maintain the minimum sum under management or to pay periodical interest as it accrued. On 10 March 2014, UBS declared its intention to seek orders for the sale, possession or foreclosure of the property.

• 3. The defendants say that they have a defence. This is that the alleged defaults were due to UBS's own breaches of their obligations in relation to the management of the invested funds, in particular in failing to provide an electronic trading platform for the investment of the funds under management and failing to carry out certain trades. It is also said that there is a cross-claim for damages flowing from the same breaches. It is unnecessary to examine these points in greater detail. As a result of the procedural mishaps described below, they have never been examined by the courts below. The Board think it right to approach the present application on the assumption that they are arguable, without deciding whether or not they are.

• 4. The action was begun in the Supreme Court on 3 October 2014, and a month later, on 5 November, UBS applied for summary\judgment. The application came before Evans J on 23 March 2015. It is apparent from the transcript of the hearing, which has been put before the Board, that no real attempt was made to present the defendants' case at this hearing. Counsel for the defendants had by mistake put the hearing into his diary for 25 March, as a result of which Mr and Mrs Starostenko were not present and Counsel was not properly prepared. An affidavit had been sworn on behalf of the defendants which, when read with the voluminous correspondence exhibited, could be said to support the defence to which the Board has referred. However, it was still in the process of being filed and was not before the court. Counsel for the defendants observed that “to that extent” the application for summary judgment was opposed. But he added that Counsel for the Bank had drawn his attention to certain authorities to which, he said, he had no answer. This appears to have been a reference to authorities such as National Westminster Bank Plc v Skelton [1993] 1 All ER 242, 246 (per Slade LJ) to the effect that a counterclaim was not normally a sufficient basis for resisting a mortgagee's summary application for possession. It appears not to have been appreciated that the defence which the defendants wished to raise was not just that the debt was abated by the cross-claim, which might in some circumstances have amounted to an equitable setoff, but that the event of default which was said to have made the debt payable was brought about by UBS's breaches of duty. This may or may not have been a good point, but Counsel's concession meant that that was never decided. Evans J gave judgment for the debt claimed and for possession in default of payment, without prejudice to the defendants' right to pursue their counterclaim.”

3 Their Lordships dismissed the appellants' appeal because they determined the Court of Appeal had been correct to find the appellants required leave to appeal and as they had none, the Court could not make orders on an appeal which was not before them.

4 At paragraph 11 Lord Sumption said:

• “11. However, it appears to the Board to be right to draw attention to the limited basis on which those decisions were made, and on which the present application is being refused. The defendants are in their present position for one reason only, namely that they have not obtained leave to appeal. They have not exhausted their rights in the courts below because it remains open to them to apply for leave in the manner that the Board has indicated. Mr Turnquest, who appeared for UBS, fairly conceded this. On such an application, a number of matters will have to be considered. They will include (i) whether the appeal would be arguable, (ii) what explanation is proffered in the defendants' evidence for the delay in seeking leave, including what has occurred and what the defendants have been doing in the meanwhile, and (iii) what if any prejudice that delay may have caused to UBS. The Board expresses no opinion of its own on any of these matters nor on the appropriate outcome of the application.”

5 Buoyed by Lord Sumption's observation that:

“ It appears not to have been appreciated that the defence which the defendants wished to raise was not just that the debt was abated by the...