Peace Holdings Ltd v First Caribbean International (Bahamas) Ltd
| Jurisdiction | Bahamas |
| Judge | Conteh, J.A.,Adderley, J.A. |
| Judgment Date | 27 December 2014 |
| Neutral Citation | BS 2014 CA 185 |
| Docket Number | SCCivApp No 57 of 2014 |
| Court | Court of Appeal (Bahamas) |
| Date | 27 December 2014 |
Court of Appeal
Allen, P.; Conteh, J.A.; Adderley, J.A.
SCCivApp No 57 of 2014
Mr. Wayne Munroe, Mr. Clinton Clarke with him, counsel for the appellant.
Mr. Brian Simms QC, Mr. Christopher Jenkins with him, counsel for the respondent.
Real Property - Mortgage — Power of Sale — Whether it was a proper exercise of discretion for the trial judge to order the sale of the property pursuant to Section 27(2) of the Conveyancing and Law of Property Act — Consideration of Arab Bank Plc v. Mercantile Holdings Ltd. [1994] Ch. 71 — Whether the trial judge should have added Order 31 of the Rules of the Supreme Court where the effect was virtually the same — Appeal dismissed and Respondent notice dismissed
It is my considered view that the appeal against the learned judge's judgment filed on behalf of the appellant Peace Holdings impugning that judgment, should be dismissed.
On 19th December, 2013, the respondent, First Caribbean International Bank, (the Bank), applied by summons to the Court below under s. 27(2) of the Conveyancing and Law of Property Act (the Act) and alternatively, under Order 31 of the Rules of the Supreme Court (RSC)
In his judgment dated 27th February, 2014, the learned judge allowed the Bank's application under s. 27 of the Act. On this footing, the judge did not find it necessary, in the circumstances, to rule definitively on the application under Order 31 RSC.
The upshot and effect of the judge's decision and order was that he granted the Court's imprimatur to the sale of the appellant's property, which was the subject of the mortgage/debenture between the appellant and the Bank; in that it directed that the property be sold free and clear of any challenge by the appellant or another third party.
The force of the order was to confer an unimpeachable title on any purchaser of the property from the Bank. The Bank had earlier, pursuant to the debenture appointed Receivers in respect of the property, who were actively canvassing the sale of the same.
The proceedings which led to the order of the judge have as their underlying basis a debenture between the parties dated 28th April, 2006. Pursuant to the debenture, the respondent advanced monies to the appellant for the construction and development of Ocean Place. The appellant, by a Writ of Summons dated 26th November, 2012 sued the respondent for breaches of the agreement between them for among other things, failing to provide adequate funding for the development. It filed a Statement of Claim on 3rd January, 2013, elaborating on its claim.
The respondent in its Amended Defence and Counterclaim deemed to have been amended on 19th December, 2013, claimed, among other things, judgment in the amount of $38,115,557.33; and an order for the sale of the charged property or any part or parts thereof either by the Recovers or itself.
The above is a brief background which resulted in the respondent's application for sale of the charged property which the judge granted on 27th February, 2014. Against the judge's ruling granting the order for sale, the appellant has taken the present appeal and filed several grounds of appeal.
The respondent, as a riposte as it were, to the appeal, in turn, filed a respondent's Notice by which it seeks to have this Court vary the sale Order made by the learned judge to the effect that, that Order be made under both s. 27(2) of the Act and Order 31 RSC.
I have stated at the outset that the appeal against the learned judge's Order of sale upon the application of the Bank pursuant to s. 27(2) of the Act should be dismissed. I reach this conclusion for the following reasons.
In the first place, none of the grounds and the substantive argument and written submissions advanced on behalf of the appellant has taken issue with the judge's exercise of the power granted to the Court by s. 27(2) of the Act. It is clear from the appellant's grounds of appeal that they do not, in terms, form or substance, seek to impugn the learned judge's Order of sale under the provisions of the Act under which the judge made it.
The thrust of the several grounds instead seek to impugn the Order on the substantive ground that the judge wrongly exercised his discretion not to have granted an adjournment to the appellant or its counsel to seek further instructions regarding some ‘9th Hour information’ or Affidavit. It was never contended that the learned judge lacked jurisdiction under the provisions of the Act upon which the respondent relied for the order for sale; or for that matter that the Court could not grant the order on the alternative ground relied on by the respondent under Order 31 RSC.
In the second place, the appellant did not argue or advance the proposition that the learned judge's Order for sale under s. 27(2) of the Act was in the circumstances of the case, an improper or wrongful exercise of jurisdiction. The appellant simply has not engaged the issue of the judge ordering the sale of the property under s. 27.
Be that as it may, the crucial question for determination however, in the view of this Court is: was the learned judge, in the circumstances of the case, right to have acceded to the respondent's application to make an order for sale under s. 27(2) of the Act?
The fact should not be lost sight of that the relationship between the appellant and the respondent was one primarily of a Mortgagor (the appellant) on the one hand and a Mortgagee (the Bank) on the other. The action was quintessentially one of a mortgage. It was in this context that the underlying issues between them were joined on the application before the judge.
Section 21 through to section 26 of the Act provides for the powers that are incident to the estate or interest of a mortgagee. Section 21(a) so far as material in the context of sale by a mortgagee of mortgaged property, provides as follows:
“21(1) A mortgagee, where the mortgage is made by deed, shall, by virtue of this Act, have the following powers, to the like extent as if they had been in terms conferred by the mortgage deed, but not further(namely)
(a) a power, when the mortgage money has become due, TO SELL OR TO CONCUR WITH ANY OTHER PERSON IN SELLING THE MORTGAGED PROPERTY, OR ANY PART THEREof…either together or in lots, by public auction or private contract…without being answerable for any loss occasioned thereby” (Underlining added).
This power of sale granted to the mortgagee is applicable only if and so far as a contrary intention is not expressed in the mortgage deed, and shall have effect subject to the terms of the mortgage deed and to the provisions contained in it: sub-section (3) of s. 21.
In the third place, it is not the case of the appellant that the power of sale that inheres in the Bank as a mortgagee, whether by the deed between it and the Bank and/or by s. 21 of the Act, was not operational on its default of repayment of the loans to the Bank. This was not advanced either before the learned judge or before this Court.
Section 22 of the Act contains provisions regulating the exercise of the power of sale by a mortgagee. Importantly, in the context of the issue framed earlier by this Court in relation to the grant of the respondent's application by the learned judge under s. 27(2) of the Act, s. 23 stipulates the effect of a mortgagee exercising the power of sale conferred by the Act (and inferentially, by the mortgage deed);
Sub-sections (1) and (2) of s. 23 provide as follows:
“(1) A mortgagee exercising the power of sale conferred by this Act shall have a power, by deed, to convey the property sold, for such estate and interest therein as is the subject of the mortgage, freed from all estates, interests and rights to which the mortgagee has priority, but subject to all estates, interests and rights which have priority to the mortgage.
(2) Where a conveyance is made in professed exercise of the power of sale conferred by this Act, THE TITLE of THE PURCHASER SHALL NOT BE IMPEACHABLE ON THE GROUND THAT NO CASE HAD ARISEN TO AUTHORIZE THE SALE, OR THAT DUE NOTICE WAS NOT GIVEN, OR THAT THE POWER WAS OTHERWISE IMPROPERLY OR IRREGULARLY EXERCISED; BUT ANY PERSON DAMNIFIED BY AN UNAUTHORIZED, OR IMPROPER, OR IRREGULAR EXERCISE of THE POWER SHALL HAVE HIS REMEDY IN DAMAGES AGAINST THE PERSON EXERCISING THE POWER.” (Underlining added)
It must be noted that the unimpeachable title conveyed by a mortgagee in exercise of the power of sale under s. 23 is not absolute or fire-proof. It is only unimpeachable for the several grounds stated in sub-section (2). These are that: i) no case had arisen to authorize the sale; ii) due notice was not given and iii) the power of sale was otherwise improperly or irregularly exercised. The appellant has not advanced any of these grounds.
Therefore, if a mortgagor could show that the power of sale was exercised on any ground outside these grounds, a successful challenge could be made out impugning the conveyance by the mortgagee.
Moreover, a sale pursuant to the statutory provisions of s. 23 of the Act is “subject to all estates, interests and rights which have priority to the mortgage” under which the power of sale is exercised.
This is the provision under which, pursuant to the respondent's application, the learned judge made the order in the instant appeal.
This section provides as follows:
“27(2) In any action, whether for foreclosure, or for redemption, or FOR SALE, or for the raising and payment in any manner of mortgage money, THE COURT, ON THE REQUEST of THE MORTGAGEE, or of any person interested either in the mortgage money or in the right of redemption, and notwithstanding the dissent of any other person, and...
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