Barden Holdings Inc. v Bessage Ltd
| Jurisdiction | Saint Kitts and Nevis |
| Judge | Ventose, J. |
| Judgment Date | 15 January 2019 |
| Neutral Citation | KN 2019 HC 2 |
| Court | High Court (Saint Kitts and Nevis) |
| Docket Number | CLAIM NO. SKBHCV2017/0379 |
| Date | 15 January 2019 |
THE EASTERN CARIBBEAN SUPREME COURT
IN THE HIGH COURT OF JUSTICE
CLAIM NO. SKBHCV2017/0379
Ms. Lenora Walwyn with Ms. Rochelle Duncan for the Claimants
Ms. Dia Forrester for the First Defendant
Mr. Damian Kelsick holding papers for Mrs. Ermelin Sebastian for the Second Defendant
Civil Practice and Procedure — Striking out — Abuse of process — Res judicata — Mortgage — Whether fixed date claim form ought to be struck out — Whether 1st defendant had shown that the master had decided validity and enforceability of second mortgage and thereby prevent claimants from filing fixed date claim form.
The First Defendant filed on 6 February 2018 an application with sworn affidavit to strike out the Claimants' Fixed Date Claim pursuant to CPR 26.3(1)(c) for being an abuse of the process of the court.
This application has its genesis in a previous application made by the First Defendant in another matter, namely, Claim No. NEVHCV2016/0129 where the First Defendant filed an application on 3 November 2016 against the Second Claimant and the Second Defendant seeking the following orders: (1) for the sale of a parcel of land forming part of the Salt Pont Estate (the “Land”); (2) that the Second Defendant discloses the amount due and owing to it under its Indenture of Mortgage dated 27 July 2001 between the Second Defendant and the Second Claimant (the “First Mortgage”); and (3) the manner in which the proceeds of sale are to be applied pursuant to the order for sale.
The First Defendant and the Second Claimant entered into an Indenture of Mortgage dated 17 January 2008 (the “Second Mortgage”). The First Defendant does not, and could not, dispute that its mortgage is second in time to the First Mortgage. The First Defendant on 18 March 2016 entered into an agreement with a third party for the sale of the Land. The Second Defendant in its affidavit filed in response to the application for sale indicated that it was in the process of exercising its power of sale pursuant to the First Mortgage by reviewing bids and that it intended to complete the sale before October 2016.
Both parties filed submissions in relation to that application. The First Defendant, after reviewing section 39 of the Conveyancing and Law of Property Act CAP 10.04 of the Laws of Saint Christopher and Nevis (the “Property Act”) and Clause 6 of the Second Mortgage, stated:
Those provisions make it clear that there is no need for the [First Defendant] to apply to the Court for an Order for sale of the [Land] and there continues to be no obligation on [the First Defendant] to seek an Order of the Court, which is why [the First Defendant] in this application seeks merely the Court's approval of its pending sale.
After quoting section 40 of the Property Act, the First Defendant submitted that:
It is apparent based on [the First Defendant's] mortgage and Section 40 of the [Property Act], [the First Defendant] is not seeking the Court's permission for it to be granted a “power of sale”, for [the First Defendant] as a mortgagee has a power of sale based on the [Clauses in the Second Mortgage] and the provisions of the [Property Act]. However, despite [the First Defendant's] ability to exercise its Power of Sale without application to the Court and [the First Defendant] currently exercising its power of sale, this application became necessary firstly, as [the Second Defendant] has not disclosed that information on the basis that it has a duty of confidentiality to [the Second Claimant]. Secondly, the pending sale of the [Land] is below the valuation obtained by [the First Defendant] but higher than that obtained by [the Second Defendant], and out of an abundance of caution, the Court's approval of the sale is being sought.
The Second Claimant submitted that:
… The Indenture of Mortgage is really in effect a loan dressed up in (sic) a mortgage. It was agreed to be a “loan” according to the true intention of the parties.
… a legal mortgage has generally taken the form of a conveyance with a proviso for reconveyance on the payment of money by a specified date. But a conveyance in this form is by no means necessarily a mortgage. Only if according to the real intentions of the parties the property was to be held as a pledge or security for the payment of money, and as such to be restored to the mortgagor when the money was paid, is the conveyance to be considered a mortgage.
The Master gave her decision on 9 August 2017 where she refused the order for sale and ordered the Second Defendant to provide the information as sought by the First Defendant (the “Master's Decision”). I will examine in detail the Master's Decision later at the appropriate section in this judgment.
As mentioned above, the First Defendant applied on 6 February 2018 to strike out the Claimants' Fixed Date Claim filed on 16 January 2018. In that Fixed Date Claim the Claimants seek various orders in summary as follows: (1) a declaration that the Second Mortgage is irregular null and void; (2) a declaration that the Second Mortgage is irregular null and void and should be cancelled; (3) a declaration that the Second Claimant's equity of redemption in favour of the Second Defendant cannot be fettered by the First Defendant purporting to sell the Land and the Second Defendant purporting to participate in any sale by the First Defendant either directly or indirectly, including acceptance of any moneys to pay off the First Mortgage. The Claimants sought orders in similar terms to the three declarations sought. One of the bases for seeking these declarations and orders is that no provision exists in the Property Act for a second mortgage and that any “encumbrance on a Deed once a mortgage is noted by way of Further Charge”. The essence of the Claimants' claim is that there is no power to have a second mortgage in accordance with the laws of Saint Christopher and Nevis and that a second mortgagee cannot exercise any power of sale under the Property Act. The court on 21 December 2017 granted an interim injunction prohibiting the First Defendant from selling the Land.
In the application to strike out, the First Defendant states that validity of its Second Mortgage is res judicata and is therefore not open to further argument in light of the Master's Decision. The First Defendant submits that: (1) there has already been a judicial determination by a competent court as to the validity of the Second Mortgage; (2) the Master's Decision on the validity of the Second Mortgage is of a final character and the issue was determined on its merits; (3) the issue before the court on the Claimants' claim is the same question as sought to be put in issue by the pleas in respect of which estoppel is claimed; (4) the issue is between the same parties, or their privies, as the parties whom the question is sought to be put in issue; and (5) there is an express judicial determination on the issue of the validity of the Second Mortgage as it was necessary and fundamental to the overall Master's Decision.
The First Defendant further submits that: (1) the Master's Decision gives rise to an estoppel on the point of the validity of the Second Mortgage such that the Claimants are precluded from making or raising any claim on that issue or reopening that issue in the case at bar; (2) the question of the validity of the Second Mortgage was a necessary ingredient for determination in the Master's Decision; (3) it would be an abuse of the court's process to allow the Claimants to proceed with their Fixed Date Claim and that there should be finality in litigation, and a party should not be twice vexed with the same matter; and (4) the Claimants' pleadings contain no new statements which could not with reasonable diligence, and should not in all the circumstances, have been brought in for determination in the previous litigation.
The applicable principles of res judicata were recently restated by the Supreme Court of the United Kingdom in Virgin Atlantic Airways Ltd v Zodiac Seats UK Limited [2013] UKSC 46 where Lord Sumption considered the leading decisions in this area, namely, the decision of: Wigram V-C in Henderson v Henderson (1843) 3 Hare 100, 115, the Privy Council in Yat Tung Investment Co Ltd v Dao Heng Bank Ltd [1975] AC 581, and the House of Lords in Arnold v National Westminster Bank plc [1991] 2 AC 93. Lord Sumption accepted the following (at p. 104—105) definitions from the decision in Arnold:
Cause of action estoppel arises where the cause of action in the later proceedings is identical to that in the earlier proceedings, the latter having been between the same parties or their privies and having involved the same subject matter. In such a case the bar is absolute in relation to all points decided unless fraud or collusion is alleged, such as to justify setting aside the earlier judgment. The discovery of new factual matter which could not have been found out by reasonable diligence for use in the earlier proceedings does not, according to the law of England, permit the latter to be re-opened.
Issue estoppel may arise where a particular issue forming a necessary ingredient in a cause of action has been litigated and decided and in subsequent proceedings between the same parties involving a different cause of action to which the same issue is relevant one of the parties seeks to re-open that issue. (Emphasis added)
Lord Sumption also made reference to another principle first articulated in Anderson and clarified in Arnold. In Anderson, Wigram V-C stated (at p. 115):
“In trying this question I believe I state the rule of the Court correctly when...
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