RBTT (formerly known as the Nevis Co-operative Banking Company Ltd and the Caribbean Banking Corporation) Claimant v Almon Nisbett (by his Lawful Attorney, Masefield Nisbett) Defendant Almon Nisbett (by his Lawful Attorney, Masefield Nisbett) Claimant RBTT (formerly known as the Nevis Co-operative Banking Company Umited and the Caribbean Banking Corporation) Defendant [ECSC]

• Jurisdiction: Saint Kitts and Nevis
• Judge: Leigertwood-Octave,Ianthe a Leigert Wood-Octave
• Judgment Date: 14 August 2012
• Judgment citation (vLex): [2012] ECSC J0814-2
• Court: High Court (Saint Kitts and Nevis)
• Docket Number: CONSOLIDATED CLAIMS NOS. NEVHCV1996/0177&NEVHCV2001/0113
• Date: 14 August 2012

[2012] ECSC J0814-2

IN THE EASTERN CARIBBEAN SUPREME COURT

HIGH COURT OF JUSTICE

CONSOLIDATED CLAIMS NOS. NEVHCV1996/0177&NEVHCV2001/0113

Between:

RBTT (formerly known as the Nevis Co-operative Banking Company Limited and the Caribbean Banking Corporation)

Claimant

and

Almon Nisbett (by his Lawful Attorney, Masefield Nisbett)

Defendant

and

Almon Nisbett (by his Lawful Attorney, Masefield Nisbett)

Claimant

and

RBTT (formerly known as the Nevis Co-operative Banking Company Umited and the Caribbean Banking Corporation)

Defendant

Background

Leigertwood-Octave

1 The parties in these consolidated claims are RBTT Bank [SKN] Limited, the successor of the Caribbean Banking Corporation and the Nevis Co-operative Banking Company Ltd. ["the Bank"] and one of their customers Almon Nisbett, a businessman, now deceased. Almon Nisbett is represented in the proceedings by his son, Masefield Nisbett, the Administrator of his Estate.

2 The Agreed Chronology filed by the parties on December 16^th 2008, adequately sets out the history of the litigation and I rely on the substance of its contents for that purpose.

3 On 29^th March 1993, Almon Nisbett mortgaged the property registered at Book 6 Folio 78 ["the First Property"] of the Register of Titles to the Bank in consideration of the sum of $900,000.00. The terms. if that mortgage ["the First Mortgage"] included inter alia that interest was at the rate of 13% per annum on the reducing balance repayable on demand and until demand by monthly instalments of $2,780.00, with the first payment commencing on 4^th September 1992 and thereafter on the 4^th day of each and every succeeding month.

4 On 4^th June 1993, the First Mortgage was filed in the Registry of Deeds and noted as a Mortgage on the Certificate of Title of the First Property.

5 On 6^th September 1993, a Notice to Pay Off was filed requiring Almon Nisbett to pay off the sum of $958,102.94 with interest at the rate of 13% per annum in accordance with the First Mortgage.

6 On SO"1 May 1994, upon a lump sum payment of $700,000.00 towards the First Mortgage, and in consideration of the discharge of the First Property, another mortgage was executed to cover the remaining balance on the First Mortgage. A. Discharge of the First Mortgage was filed on 30^th May 1994.

7 Also on 30^th May 1994, a Memorandum of Mortgage — Demand ["the Second Mortgage"] in the sum of $387,088.81 was registered. Almon Nisbett's property registered at Book 31 Folio 349 on the Register of Titles ["the Second Property"], was used to secure the Second Mortgage.

8 Under the terms of the Second Mortgage, interest was calculated at the rated of 13% per annum calculated on the reducing balance payable by instalments of $2,780.00 per week commencing on 30^th April 1994 and ending on 3 l^st January 2003 or until demand.

9 In October 1996, the Bank instructed its solicitor to commence legal proceedings against Almon Nisbett to recover all sums due and owing.

10 On 4^th November 1996, the Bank filed a Summons in Misc. Suit No. 177 of 1996 to settle the Articles of Sale of the Second Property. The Summons was issued under Section 75 of the Title by Registration Act Cap. 279 ["Cap. 279"] of the Laws of the Federation of Saint Christopher and Nevis. An affidavit in support, Notice to Pay Off, Instructions to Seize Property and Act of Seizure were also filed on the same date.

11 On 18^th January 2001, the Bank filed a Writ of Summons Indorsed with Statement of Claim in the same Suit claiming monies due and owing to the Bank from Almon Nisbett in respect of a loan extended to him at his request on 30^th March 1994. The amount due to the Bank was stated to be $839,502.83. Interest on the debt until payment was also claimed.

12 On 6^th March 2001, Almon Nisbett filed a Defence and Counterclaim. He admitted that he had failed to pay the Bank the sum of $387,088.81 or the sum of $534,220.07 as referred to in the Notice to Pay off or any such sum. He denied that he was liable to the Bank for the sums claimed or any sums at all.

13 In his Counterclaim, he sought declarations that the Articles of Sale were of no legal effect and that the Agreement for the Second Mortgage was unconscionable and had been obtained in circumstances of economic duress. He sought orders that theSecond Mortgage be set aside and that the Bank be restrained from selling the Second Mortgage, along with damages and costs.

14 In their Reply and Defence to Counterclaim, filed on 15^th October 2001, the Bank denied that they were guilty of undue influence as alleged by Almon Nisbett. They contended that in the execution of the Second Mortgage, Almon Nisbett had not been coerced or compelled but he had done so of his own free and independent will.

15 While the proceedings inMisc. Suit 1 77 of 1996, were ongoing, Almon Nisbett filed a Fixed Date Claim in NEVHCV2001/0113, on 19^th November 2001. The Claim was brought under Section 94 of Cap. 279, to settle questions arising in the course of a sale of land in accordance with the provisions of the Act. He sought 15 Declarations by the Court, including declarations that:

• i The Second Mortgage was void on the ground of mistake;

• ii. The Bank be made to render to him an account of all the monies received;

• iii. The Bank had unlawfully entered into possession of the Second Property because it had failed to comply with the procedure prescribed by Cap. 279; and

• iv. Related to the Bank's management of the Second Property while it was in its possession.

16 In its Defence filed on 14^th May 2002, the Bank denied that there was an error on its part with respect to the outstanding balance owed by Almon Nisbett or that it had ever had possession of the Second Property. The Bank counterclaimed for the sum of $839,502.82. together with interest of 13% until the date of judgment and in the alternative an Order of Sale of the Second Property, to recover the sum outstanding under the Second Mortgage.

17 The pleadings raise several issues requiring determination but in my view, they are all related to the following:

• 1) Was the Second Mortgage void because there was a mistake in the material particular of its terms?

• 2) Was the Second Mortgage procured in circumstances amounting to economic duress and or by undue influence?

• 3) Whether the terms of repayment in the Second Mortgage amounted to an unconscionable bargain?

• 4) Whether Almon Nisbett was liable for the outstanding sums together with accrued interest as claimed by the Bank?

• 5) Were the Articles of Seizure null and void because the Bank had failed to comply with the provisions of Cap. 279?

• 6) Was the Bank liable for any damage or loss suffered by Almon Nisbett during its possession of the Second Property?

Mistake

18 The first issue that I will deal with relates to mistake. The contention by Almon Nisbett is that the Second Mortgage is void because there was a substantial mistake in the material particulars of its terms.

19 Phillips MR in the case ofGreat Peace Shipping Limited v Tsavliris Salvage (International) Limited' defined mistake simply as an erroneous belief. At common law, a contract may be vitiated on the ground of mistake of one party or both depending on the circumstances of the case.

20 Three types of mistakes have been indentified in contract: unilateral mistakes; mutual mistakes; and common mistakes. The two sides do not agree which type or types of mistake apply in this case. Miss Harper submitted that there was a mistake in communication between the Bank and Almon Nisbett and that he had operated under a mistake or understanding about the terms of the Second Mortgage. As such it fell within the category of a unilateral mistake or mutual mistake. The Bank's written submissions refer to cases involving common mistake and pleasnon est factum2, which suggests that they have approached it from that position.

21 The leading cases on unilateral mistake areSmith v Hughes3 and Hartog v Colin and Shields[1939] 3 All ER 5664. Miss Harper has relied on the latter. These authorities indicate that a unilateral mistake is where only one party to a contract is mistaken as to the terms or subject-matter contained in a contract.

22 Mutual mistake was considered by the court in the case ofRaffles v Wichelaus[1871] LR 6 QB 5975. In that case, the court found that an objective assessment of the negotiations between the parties showed that they were at cross-purposes, the result was that that no agreement had been made between them. The case therefore fell into the category of mutual mistake because each party had erroneously believed that the other had agreed to his terms.

23 In her written submissions, Ms. Walwyn referred to the case ofGreat Peace Shipping Ltd. v Tsavliris Salvage (International) Ltd; the Great Peace6, which considered common mistake. Common mistake arises where the parties to a contract share the same mistake. It exists in three main sets of circumstances:

• 1) a common mistake as to the existence of the subject matter of the contract;

• 2) a common mistake as to the ownership of the subject matter of the contract; and

• 3) a common mistake as to the qualities or attributes of the subject matter of the contract.

24 Lord Atkin held inBell v Lever Brothers[1932] AC 1617, where a contract expressly or impliedly contains a condition of a contract, it is voidable if the assumption is not true. In that case, common mistake arose because both parties believed that they were bargaining about a service contract, which could only be terminated with compensation. In fact, the contract could have been terminated without compensation.

25 I have considered the authorities and there are no circumstances in this case gave that rise to common mistake. The Bank has never agreed that there was any erroneous belief on its part in relation to the Second Mortgage, therefore mutual mistake must be...