[1] Lemon Grove Company 1st Claimant [2] Adam Bilzerian 2nd Claimant v [1] First Caribbean International Bank [2] Belmont Resorts Ltd [3] The Registrar of the High Court [4] Attorney General of the Federation of St. Christopher and Nevis [5] Kate Walwyn

• Jurisdiction: Saint Kitts and Nevis
• Judge: Ramdhani J.
• Judgment Date: 03 February 2015
• Judgment citation (vLex): [2015] ECSC J0203-2
• Date: 03 February 2015
• Court: High Court (Saint Kitts and Nevis)
• Docket Number: CLAIM NO. SKBHCV 2013/0213

[2015] ECSC J0203-2

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

FEDERATION OF SAINT CHRISTOPHER AND NEVIS

(CIVIL)

A.D. 2013

CLAIM NO. SKBHCV 2013/0213

Between:

[1] Lemon Grove Company

1st Claimant

[2] Adam Bilzerian

2nd Claimant

and

[1] First Caribbean International Bank

[2] Belmont Resorts Limited

[3] The Registrar of the High Court

[4] Attorney General of the Federation of St. Christopher and Nevis

[5] Kate Walwyn

The first defendant, the First Caribbean International Bank, the mortgagee of certain property in St. John's, St. Kitts, owned by the first claimant, Lemon Grove Company, sought and obtained an order of judicial sale of the same property which order was entered on the 18^th October 2012. It was ordered that the sale be advertised in two weekly newspapers on the island and was to be done by judicial auction. The auction was conducted on the 23^rd May 2013, when the property was sold to the second defendant, Belmont Estates Limited. It is that sale which led to the substantive claim being filed by the two claimants against all the defendants seeking declarations that (a) the sale was done contrary to law in that the Order of the Master required that the Registrar conduct the sale and in fact it was the Chief Clerk who carried out this role instead, and (b) that the sale was tainted by fraud as there was only one true bidder at the auction, and that the fifth named defendant, Kate Walwyn, who had earlier claimed to be an observer at the sale, was seen to be in discussions with the representatives of Belmont Estate Limited and then presented herself as a bidder to satisfy the requirement that there be numerous bidders at an auction. She made a token bid and then the second and successful bid was made by Belmont Estates Limited. The claimants also sought an order that notice should be given to the second claimant of the new auction sale. The claimants then filed this application to restrain the transfer of the legal title of the property until the claim is determined. The defendants have all resisted any injunctive relief being granted. Quite apart from the responses to the issues raised by the claimants, arguments were made by the first defendant that the second claimant was merely someone who had a money judgment against the first defendant and that neither the application nor the claim did not reveal any cause of action against any of the defendants and so that no consideration could be given to the grant of any relief to the second claimant.

Held: Granting injunctive relief in favour of the first claimant application and refusing any relief to the second claimant:

• 1. The Order of the Master made on the 31^st July 2012 and entered on the 18^th October 2012, approving the Article of Sale which in turn directed that that 'the Registrar of the Supreme Court shall sell' the property must be read together with section 70 Eastern Caribbean Supreme Court (St Christopher and Nevis) Act Cap 3.11. Neither the Master's Order nor the approved Articles Sale can operate to limit the operation of express legislative provision that confers powers on the Chief Clerk to have conduct of judicial auctions, in the event that the Registrar was absent from office. The power given to the Chief Clerk is one given by the operation of law that is triggered by the Registrar's absence from office. This allegation made by the claimants in the circumstances of this case, having regard to the express words contained in the approved Articles of Sale, therefore does not disclose any serious issue to be tried.

• 2. An allegation that an auction sale was tainted by fraud in the sense that the only true bidder at the auction sale colluded with a mere spectator to present herself as a bidder to satisfy the statutory requirement that there should be numerous bidders at every auction presented a serious issue to be tried as proof of such fraud may have the result that the sale would be set aside.

  Applied: American Cynamid v Ethicon [1975] AC 396

• 3. In the usual case, injunctive relief would not be granted where it is appropriate to confine the applicant to his remedy in damages. Whether or not damages would be an adequate remedy is not to be determined on the basis of what outcome one party would desire, but on established principles of law. Where damages are shown to be adequate that would normally be sufficient to defeat an application for an interim injunction. In some cases where the assessment of damages would be an extremely complex and unsatisfactory exercise, damages may not be an adequate remedy. So too, in some cases if assessment involve a speculative ascertainment of the value of a loss of a chance, then that may not be sufficient to prevent an interim injunction as damages may not be regarded as adequate. If this auction sale was tainted with fraud, then in the normal case, the damages that the claimant would have suffered would have to be assessed with reference to the best value or the market value which an auction sale property conducted would have realized at the time of the improper and unlawful disposal. In this case, however, the allegation is that the fraud meant that there was only one bidder at the auction. This is significant at this stage when the court is being asked to grant an interim injunction, in a claim to set aside the actual sale of the property. In these circumstances, quite apart from the market value of the property, the claimants would have also lost that chance to secure an even greater sale price; that is what requires this 'speculative ascertainment' of the value of that chance. It would therefore be a difficult exercise to assess the damages the claimant would have suffered. This is therefore not a case in which the first claimant should be confined to his remedy in damages. The orders being sought would not be refused on this basis.

  Considered: Evans Marshall v Bertola [1973] 1 WLR 349Cuckmere Brick Co. Ltd. v Mutual Finance Ltd. [1971] 1 Ch 949 [1971] 1 Ch 949, 966–969 and Aodhcon LLP v Bridgeco Ltd [2014] EWHC 535 (Ch) NATS (Services) Ltd v Gatwick Airport Ltd 2014 WL 4636860 Queen's Bench Division (Technology & Construction Court); Letting International Ltd v Newham LBC [2007] EWCA Civ 1522; Araci v Fallon [2011] EWCA Civ 668; NATS (Services) Ltd v Gatwick Airport Ltd 2014 WL 4636860 Queen's Bench Division (Technology & Construction Court)

• 4. There are several factors in this case that are relevant in considering where the balance of justice lies in this case. These include the fact that upset price on the sale of the property, which has been fixed by the court falls well short of the total indebtedness of the first claimant. In the event there was in fact no bona fide sale, it also includes the possibility that an auction sale conducted with numerous bidders might realize a greater sum that might serve to the benefit even to the first defendant as there would be a smaller sum to be recovered from the first claimant. It also includes the consideration that in the event a fraud is shown to have been perpetuated on the conduct of the auction sale, the integrity of judicial sales might be called into question. It is also relevant to this balancing exercise that commercial banks should be concerned that when they seek to exercise their rights of sale under the mortgage instrument, that such sales are conducted in a bona fide manner. The damage suffered by the first defendant by the grant of an injunction will be more readily ascertainable and would not be irremediable. The balance of convenience in this case therefore militates in favour of the grant of the injunctive orders being sought.

  Applied: American Cynamid v Ethicon [1975] AC 396; National Commercial Bank Jamaica Ltd v Olint Corpn Ltd [2009] UKPC 16

• 5. On an application for an injunction, the court is required, whether on the point being taken by the respondent or on its own motion, to consider whether the applicant has any valid legal right of claim capable of supporting his application. Where upon such an examination it is clear from the application and the substantive statement of case, that the applicant has no valid and subsisting cause of action against any of the named respondents, the court is entitled to not only refuse the injunctions sought but may go on to consider whether the instant case is an appropriate one in which to exercise its case management powers and its powers under CPR 15.2 to strike out the underlying substantive claim. In taking such a step the court is acting in accordance with the overriding objective and its duty to effectively manage cases. Such powers, however, must only be exercised in the clear and obvious case, where the court considers that the claimant has no real as opposed to a fanciful prospect of succeeding on the claim or issue. Further, in the absence of an application for summary judgment, the court's powers under CPR 15.2 should only be exercised where the applicant has had an opportunity to be heard on the issue, as was the case on this application for an injunction. In this case, the first defendant's argument that the second claimant had no cause of action to ground neither the application nor the claim was an argument of merit.

  Applied: Rule 15.2 of the Civil Procedure Rules 2000; Swain v Hillman [2001] 1 All E.R. 91; Baldwin Spencer v The Attorney General of Antigua Civil Appeal No. 20 of 1997 considered.

• 6. The registration system established by the Title by Registration Act, Cap. 10.19 is intended to protect property rights, bring certainty and clarity to land ownership, and to facilitate smooth land transactions by requiring public declaration, by way of registration, of all rights, interests and encumbrances in and over land. This system is designed to ensure that a Certificate of Title guarantees and protects ownership over all such registered land by its indefeasible nature, and to this end...