Re Caines

• Jurisdiction: Saint Kitts and Nevis
• Court: High Court (Saint Kitts and Nevis)
• Judge: Hylton, J.
• Judgment Date: 14 December 1992
• Neutral Citation: KN 1992 HC 5
• Docket Number: No. 63 of 1992
• Date: 14 December 1992

High Court

Hylton, J.

No. 63 of 1992

Caines, Re

Appearances:

(1) For Barclays Bank – Mr. C. Wilkin and Miss E. Kelsick of Kelsick, Wilkin and Ferdinand

(2) For Culvert Caines – Dr. H. L. Browne and Mr. G. Hamilton

Contract - Undue influence — Equitable mortgage assigned to bank and later converted to a legal mortgage re monies owed by applicant — Ongoing discussion re the repayment of outstanding sums — Property seized and prepared for sale — Whether there was inequality of bargaining power — Whether Bank had a duty to ensure that applicant had independent legal advice — Whether there was undue influence — Whether there was a breach of fiduciary duty.

Hylton, J.

1 By a Memorandum of Deposit of Certificate of Title dated 23rd December, 1987 Culvert Caines assigned to Barclays Bank an equitable mortgage in respect of lands designated by Certificate of Title dated 5th September, 1983 registered in Register Book 1 – 2, Folio 142 of the Register Book of Titles of the Island of St: Christopher, and by the same Memorandum of Deposit of Certificate of Title irrevocably appointed the Bank to be his agent for the purpose of converting the equitable mortgage into a legal mortgage vide Section 63 Cap. 279 – The Title by Registration Act. This Equitable mortgage was, on 15th May, 1992 converted into a legal mortgage in respect of the amount of $276, 843.53 then owed to the Bank by Culvert Caines.

2 Prior to the conversion of the Equitable mortgage to a legal mortgage however there appears to have been ongoing discussions between the Bank and Caines relating to the payment of the moneys due and owing as evidenced by letter of 22nd October, 1990 to the Bank by Mr. Caines as follows:–

“22 October 1990

The Manager

Barclays Bank PLC

ST. KITTS

Dear Sir

I refer to our conversation on 23 July 1990 in which you advised that you were giving me until the end of October to bring the Loan up to date.

Many persons have shown interest in the property and are willing to purchase it but because of the Credit problem in St. Kitts this has caused some delay.

Kindly allow me some more time say until the end of January to get the property sold.

Thank you.

Sgd. Calvert Caines”

letter 22nd May, 1991 from the Bank to Mr. Caines as follows:–

“22nd May, 1991

Mr. Calvert Caines

Bourkes Project

Sandy Point

St Kitts

Dear Sir

REFERENCE YOUR MORTGAGE LOAN

REPAYABLE OVER 7 YEARS AT $5,000.00 P.M.

We refer to our conversation on 17th May 1991 with the undersigned and confirm that your loan account is presently 16 ¹/₂ months in arrears.

If you are unable to achieve the sale of your property at Boyds Housing Project or bring the arrears on your loan up to date by 31st July 1991, we regret we will have no option but to take steps to realise the Bank's security.

We sincerely hope that you will be able to meet the deadline.

Yours faithfully

Sgd. C M A Morton

C M A MORTON (Mrs.)

ASSISTANT MANAGER

Ch/clr

letter of 27th September, 1991 from Kelsick, Wilkin & Ferdinand to Mr. Caines –

“KELSICK, WILKIN & FERDINAND

JEF/ype

27 September 1991

Mr. Calvert Gaines

Bourkes Project

Sandy Point

St. Kitts “

Dear Mr. Caines

We are instructed by Barclays Bank PLC at its branch office in Basseterre, St. Kitts that you are indebted to the Bank by way of loan in the sum of 255,497.77 and interest accruing thereon at the rate of 14 percent per annum.

We are instructed to demand that you pay to the Bank on or before the 27th October, 1991, the said sum of $255,497.77 and interest accrued thereon up toy-the elate of payment.

Yours faithfully

sgd. Kelsick, Wilkin & Ferdinand

KELSICK, WILKIN AND FERDINAND

SOLICITORS FOR BARCLAYS BANK PLC”

and letter of 10th December, 1991 from Kelsick, Wilkin and Ferdinand to Mr. Caines –

“KELSICK, WILKIN & FERDINAND

DEB/ype

December 10, 1991

Mr. Culvert Caines,

Bourkes Project,

Sandy Point,

St. Kitts.

Dear Mr. Caines,

We are instructed by Barclays Bank, PLC at its branch office in Basseterre, St. Kitts.

Our instructions are that you are indebted to the Bank by way of loan in the sum of $256,493.19 and interest which accruing thereon at the rate of 14% per annum. This said loan is secured by an equitable mortgage over residential property situate at New Boyd's Housing Development in the name of Calvert Caines, and by an equitable mortgage over residential property situate at s Housing Development in the name of Calvert Caines and Angela Caines.

We are instructed to demand that you pay to the Bank, on are the 31st day of December 1991, the said sum of $256, 493.19 and interest accrued thereon up to the date of payment.

Should you fail to pay these outstanding debts as demanded herein, legal proceedings will be instituted against you further notice.

Yours faithfully,

Sgd. Kelsick, Wilkin & Ferdinand

KELSICK, WILKIN AND FERDINAND

Solicitor for Barclays Bank PLC.

cc. Mrs. Angela Caines

Notice to pay off the total loan was given to Calvert Caines on 5th May, 1992.

On 23rd October 1992 by way of Summons an application to Settle Articles of Sale was heard in Chambers having been adjourned from 5th October 1992. The property was seized on 8th August, 1992 by the Bailiff after a valuation thereof had been done by Mr. Michael Bentley of Bentley Associates. The property was valued at between $250,000.00 to $315,000.00 – See Report attached to affidavit of Mr. Michael Bentley filed 5th October, 1992.

The Articles of Sale were fixed as per Draft filed on 5th October, 1992 and the date of Sale was fixed for 11th December, 1992.

On 3rd December, 1992 Mr. Caines caused a Summons to be filed seeking the following relief:–

“An Order that all proceedings in this matter be set aside on grounds that the said orders were granted–.–

(1) pursuant to a transaction resulting from undue influence and a breach of fiduciary duty.

(11) contrary to the Rules of Natural Justice.”

3 An affidavit of even date by Calvert Caines was filed in support of the Summons.

4 At the hearing in Chambers on 9th December, 1992 Dr. Browne confined his submissions and arguments to (1) and made no submissions pertaining to a breach of the Rules of Natural Justice. Counsel relied on Lloyds Bank Ltd. v. Bundy. [1974] 3 All E.R. 757.

5 Counsel noted particularly that he was not alleging any fraud, misrepresentation on conscious wrong doing.

6 He submitted inter alia that:–

• (1) There was inequality of bargaining power – See Bundy's case p. 765(c).

• (2) That bank had a duty to ensure that Mr. Caines had independent legal advice given inequality of bargaining power and in so far as Bank failed that is fatal to validity of transaction. He submitted further that a conflict of interest was to be presumed and it was for the Bank to demonstrate that there was no such conflict.

7 Bundy's case 767 C –

“On the other hand, whilst disclaiming any intention of seeking to catalogue the elements of such a special relationship, it is perhaps of a little assistance to note some of those which have in the past frequently been found to exist where the court had been led to decide that this relationship existed as between adults of sound mind. Such cases tend to arise where someone relies on the guidance or advice of another, where the other is aware of that reliance and where the person on whom reliance is placed obtains, or may well obtain, a benefit from the transaction or has some other interest in it being concluded. Icy addition, there must, of course, be shown to exist a vital element which in this judgment will for convenience be referred to as confidentiality. It is this element which is so impossible to define and which is a matter for the judgment of the court on the facts of any particular case”.

8 768 (b) – (d):–

“It is thus to be emphasised that as regards the second class the exercise of the court's jurisdiction to set aside the relevant transaction does not depend on proof of one party being ‘able to dominate the other as though a puppet’ (to use the words-again adopted by the...