Development Bank of St Kitts and Nevis Respondent/Claimant v Mitchell Gumbs 1st Defendant/Applicant Derrick A. Lake 2nd Defendant [ECSC]

• Jurisdiction: Saint Kitts and Nevis
• Judge: Ramdhani J
• Judgment Date: 08 April 2014
• Judgment citation (vLex): [2014] ECSC J0408-5
• Court: High Court (Saint Kitts and Nevis)
• Docket Number: CLAIM NO.: SKBHCV 2012/0022
• Date: 08 April 2014

[2014] ECSC J0408-5

THE EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

FEDERATION OF SAINT CHRISTOPHER AND NEVIS (CIVIL) A.D. 2013

CLAIM NO.: SKBHCV 2012/0022

Between:

Development Bank of St Kitts and Nevis

Respondent/Claimant

and

Mitchell Gumbs

1st Defendant/Applicant

Derrick A. Lake

2nd Defendant

Appearances

Mr. Arudranauth Gossai for the Applicant/1 ^st Defendant

Ms. Deidre Williams for the Respondent/Claimant

Cause of Action — Joint and Several Liability — Default Judgment Against one Defendant — Doctrine Election — Merger of Judgment — Whether Default Judgment Amounting to Act of Unequivocal Election — Whether Doctrine of Election Relevant to Cases of Joint and Several Liability.

Agreement to Settle Claim — Privileged Communication between Attorneys — Details of Privileged Communication — Whether Court should be provided with Actual Details of Privileged Communication.

1 Ramdhani J. (Ag.) This matter is similar to a number of cases that has recently engaged the court's attention. First, it raises for the court's determination, issues relating to election and merger of cause of action in judgment which may flow from a claimant seeking and obtaining default judgment against one of two parties in a claim for a debt. Second, it also raises as a primary issue whether certain 'without prejudice discussions and communications' between attorneys at law on opposite side, and statements made to the Master during case management conferences, have led to a binding agreement between the 1 ^st defendant/applicant and the claimant/respondent to settle the claim against the applicant.

Parties and the Underlying Claim

2 On the underlying claim filed on the 19 January 2012, the 1 ^st defendant, the applicant on this application, together with the 2 ^nd defendant were sued jointly and severally as guarantors on a loan extended to a third party, one Mr. Kafa Burt, by the claimant, the Development Bank of St. Kitts and Nevis, the respondent on this application. The third party, Mr. Burt was not sued, but default judgment was obtained against the 2 ^nd defendant in the sum of $108,627.77 with interests and costs, being the full sum claimed.

3 In the particulars provided by the statement of claim, the claimed sum comprised of $70,177.00 lent to the third party and other banking and transactions charges and interests related to the loan. It was particularized that both the 1 ^st defendant and 2 ^nd defendant guaranteed this debt.

4 The statement of claim further contended that it was a term of the loan agreement and the guarantee that if there was default in making any of the monthly payments on the loan, then the full outstanding amount would become immediately payable from either of the guarantors as it was a debt owed by the defendant jointly and severally. There was default, the statement of claim contended, and as such the respondent became entitled to seek to recover the full outstanding amount.

5 On the 22 February 2012 the applicant filed a defence disputing the claim on a number of grounds. On the 11 June 2012, the applicant further filed an Amended Defence.

6 There was no acknowledgement of service or defence filed by the 2 ^nd defendant, and on the 15 June 2012 the respondent requested judgment in default against the 2 ^nd defendant. On the 22 June 2012, as noted earlier, judgment in default was entered against the 2 ^nd defendant for the full amount claimed.

7 The remaining claim against the 1 ^st defendant came up on a number of occasions before the learned Master when there were statements made relating to a settlement. Several adjournments later, and when it was clearly stated by Ms. Deidre Williams for the claimants that the matter was not settled, the Master took the matter off the court's List. The applicant then filed the present application

The Application to Strike Out the Claim and to Enforce the Agreement to Settle

8 By this Notice of Application dated the 2 July 2013, the applicant in relying on the doctrine of election and merger as well as an 'agreement to settle' which he says was arrived at between the parties, is specifically seeking the following relief:

• 1. That this matter be restored to the Court List.

• 2. That the Claimant/Respondent pay the Applicant/1 ^st Defendant his agreed legal costs in the amount of $8,843.16.

• 3. That the claim filed by the Claimant/Respondent in this matter be dismissed against the Applicant/1 ^st Defendant.

• 4. That the Claimant be ordered to pay the costs of this Application in the amount of $884.32

• 5. Such Further and/or other relief that the Court deems just and proper in the circumstances.

9 In the grounds supporting the application, the 1 ^st defendant relies on the fact that the claimant, having brought its claim against both parties, sought and obtained default judgment against the 2 ^nd defendant for the entire sum claimed in its claim form. He stated that meant that the claimant could not seek to recover the said sum a second time from the 1 ^st defendant. If the claim were to proceed against the 1 ^st defendant it would mean that the claimant, if it succeeds, would obtain two judgments on the same claim or double the amount claimed. This, the 1 ^st defendant asserts, is impermissible.

10 He further states, the claimant, by requesting and obtaining the default judgment against the 2 ^nd defendant made an election to proceed to judgment against the 2 ^nd defendant alone and must have been aware of the attendant consequences of so doing.

11 Apart from consequences of election and merger, the 1 ^st defendant contends that there has been an agreement to settle the matter. He stated that after he had filed a defence in this matter, Mr. Jason Hamilton, one of the attorneys at law representing the respondent had agreed with Mr. Arudranauth Gossai, his attorney at law, to settle the matter and to withdraw the claim against him, as well as to pay certain 'agreed legal costs' in the sum of $7,599.63.

12 Providing the evidential basis for the grounds is an affidavit dated the 2 July 2013, and sworn to by Ms. Shermia Richards a legal clerk in the Law Firm of Gonsalves Hamel-Smith (with which Mr. Gossai is associated), attorneys on record for the applicant. Ms. Richards's entire affidavit has been drafted on information provides by Mr. Gossai, who represented the applicant on the hearing of this application. Briefly, with regard to the purported settlement agreement, she states that after default judgment had been obtained against the 2 ^nd defendant, there was a number of discussions between counsel, several pieces of written communication, and even certain statement made to the Master which became incorporated in several case management orders. It is this that the 1 ^st defendant is relying on to prove a binding agreement to settle the matter and pay the specified costs.

13 On the opposite side, the respondent is relying on an affidavit of Mr. Jason Hamilton dated the 10 July 2013, filed in response to Mr. Richards' affidavit, in which he denies that there has been any agreement. He admits that there have been discussions with a view to settle the matter, but he states there was never any complete and binding agreement.

14 There is another document that purports to be an affidavit of Ms. Kristyl Bristol dated the 10 July 2013, which has been filed on behalf of the respondent. This court, agreeing with the applicant, is unable to take any cognizance of this document, as Ms. Bristol did not swear to it 1

15 Following the affidavit of Mr. Jason Hamilton and the unsworn affidavit of Ms. Bristol, the applicant filed an 'Affidavit in Reply' on the 15 July 2013 sworn to by Ms. Richards. In this affidavit she, again being informed by Mr. Gossai, challenged Mr. Hamilton's version, providing more details as to what was stated to the Master, and again deposed that Mr. Gossai and Mr. Jason Hamilton had met in January 2013 and agreed on all the outstanding matters.

16 There has been no cross examination on any of the affidavits.

The Issues

17 There are two main issues which the court must decide in this matter, namely:

• (1) Whether as a matter of law, the doctrine of election and merger of cause of action in judgment applies to this case?

• (2) Whether there is an enforceable agreement to settle the matter?

Election and Merger of Cause of Action

18 As noted earlier, it is the 1 ^st defendant's arguments that when the claimant sought and obtained the default judgment against the 2 ^nd defendant this operated as a complete bar to the action against the 1 ^st defendant. 2 He states this amounted to an unequivocal election

and as such there was a merger of the cause of action against him into the judgment obtained against the 2 ^nd defendant. He relies on a number of cases to support his position, namely John Hopkin v Robinson Lumber Co. Ltd.3; Hammond v Scholfield4; Morel Brothers Co. Westmoreland (Earl of)5.

19 I have treated with this matter at length in Development Bank v Brian Brown and Others6, which judgment was also delivered today, and I do not propose to revisit all the authorities dealt with in that matter. I will simply say here that I am not in agreement that these principles assist the 1 ^st defendant having regard to the circumstances of this case. All of the cases cited by the 1 ^st defendant involve either situations of joint liability between two or more debtors, liability in the alternative, or cases in which the cause of action against one is inconsistent with the cause of action against the other. It is in these cases that an equivocal election will have the consequences that the 1 ^st defendant argues hopes for.

See Rukhmin Balgobin v South West Regional Authority7; King and Another v Koare8; United Australia Company v. Barclays Bank9.

20 The cases however, show that there is an important distinction to be made between cases of joint liability and cases...