National Bank of Anguilla (Private Banking and Trust) Ltd v Joseph et Al; Caribbean Commercial Investment Bank Ltd v Joseph et Al

• Jurisdiction: Anguilla
• Judge: Moise, M.
• Judgment Date: 20 March 2018
• Neutral Citation: AI 2018 HC 3
• Court: High Court (Saint Christopher, Nevis And Anguilla)
• Docket Number: CLAIM NO.: AXAHCV2017/0047 and 0048
• Date: 20 March 2018

EASTERN CARIBBEAN SUPREME COURT

IN THE HIGH COURT OF JUSTICE

(CIVIL)

Moise, M.

CLAIM NO.: AXAHCV2017/0047 and 0048

Between:

National Bank of Anguilla (Private Banking and Trust) Limited

(In Administration)

Claimant/Respondent

and

Clayton Joseph Lorna Joseph

Defendants/Applicants

Caribbean Commercial Investment Bank Limited

(In Administration)

Claimant/Respondent

and

Clayton Joseph Lorna Joseph

Defendants/Applicants

Appearances:

Ms. Jacinth Jeffers of Counsel for the Defendants/Applicants

Ms. Yanique L. Stewart of Counsel for the Claimant/Respondent

Civil practice and procedure - Default judgment — Promptitude — Good explanation — Prospect of success — Application to set aside default judgments — Whether applicants applied to court promptly — Whether applicants provided good explanation for failure to file acknowledgment of service/defence within stipulated time — Whether applicants had real prospect of successfully defending claim — Applications denied.

Moise, M.

1 I wish to first of all apologise to the parties for the delay in delivering this judgment. On 26 ^th February, 2018 at the conclusion of the hearing I granted certain orders and undertook to deliver my written reasons within 14 days. However, due to circumstances beyond my control the delivery of this decision was delayed by one week and for that I apologise for any inconvenience it may have caused for the parties involved.

2 This is an application to set aside judgments in default of acknowledgment of service dated 8 ^th November, 2017 entered against the Applicants in both cases captioned above. The applications are consolidated for the purpose of this decision as they arise from generally similar, if not the same, facts and raise the same issues for determination. The applicants apply to set aside the judgments in default pursuant to Rule 13.3(1) of the Civil Procedure Rules 2000 (CPR). I have denied both applications after considering the affidavits and submissions from both parties. These are my reasons for doing so.

The Facts

3 By loan agreement dated 12 ^th August, 2013 the applicants were granted a loan facility with the Caribbean Commercial Investment Bank Limited (CCIB). The applicants borrowed a total of One Hundred Thousand United States Dollars ($100,000.00US) From CCIB and agreed to repay the loan in monthly instalments of Two Thousand and Fifty One United States Dollars and Sixty-five Cents ($2,051.65US) at an annual interest rate of eight point five percent (8.5%). This loan was secured by term deposit number 1000266 in the sum of Eighty-six Thousand, Seven Hundred and Three United States Dollars ($86,703.00US) and term deposit number 1002580 in the sum of Thirteen Thousand, Two Hundred and Ninety-seven United States Dollars ($13,297.00US).

4 On 28 ^th April, 2015 the applicants successfully negotiated a Sixty-eight Thousand US Dollar ($68,000.00US) loan facility with the National Bank of Anguilla (Private Banking and Trust) Limited (PBT). It is accepted by both parties that the loan was secured by term deposit number 1022057 in the sum of Seventy-eight Thousand, Eight Hundred and Ninety United States Dollars and Ninety-one Cents ($78,890.91US). These deposits represented money belonging to the Applicants which were deposited with PBT. The applicants were obligated to repay the sum of money at an annual interest rate of seven percent (7%) by monthly instalments of One Thousand, Three Hundred and Fifty-eight United States Dollars and Thirty-six cents ($1,358.36US).

5 Both agreements speak to the issue of default of payments by the applicants in identical terms and state that if there was any default made “in payment of any part of the installment of principal or on interest, then the whole sum of principal and interest shall become immediately due and payable at the option of the lender without notice.”

6 Further to this, and of relevance to this case, is that the loan agreement with PBT contained an express right of set-off in favour of the Bank. The agreement states that if the applicants were to fail to pay the principal, interest, costs and fees when due, the respondent Bank reserved a right to “set off or transfer said funds from any monies standing in the credit of any account held by the borrower at the Lender's office in or towards satisfaction of the borrower's liabilities and obligations hereunder.” This right of set off is not limited to the deposits used as security for the loan, but also extends to any funds standing in the applicants' credit at the respondent's office. In the evidence presented to me I observe that no corresponding right was contained in the express provisions of the contract exhibited between the applicants and CCIB.

7 Initially, the applicants duly met their obligations to the banks. However, on 20 ^th April, 2016 they received a letter from Mr. William Tacon who represented himself as the Administrator of PBT having been appointed by High Court order dated 22 ^nd February, 2016. On 5 ^th May, 2016 the powers of the Administrator were extended by court order to include the powers of a liquidator pursuant to section 31(3) of the Financial Services Act. A similar letter was served on the Applicants in relation to CCIB on 10 ^th May, 2016.

8 In these letters to the applicants Mr. Tacon informed them of this change in circumstance and gave instructions to the effect that payments towards the loans were not to be made to the usual account and informed the applicants of the new account into which monthly payments ought now to be deposited. The details of the new payment arrangements were annexed to letters dated 20 ^th April, 2016 and 10 ^th May, 2016 addressed to the applicants.

9 The applicants objected and upon receiving this letter wrote to the Administrator, through their solicitors, on 10 ^th June, 2016 advising that they would no longer be making payments towards the loans and requested that their deposits should be used to pay off the outstanding balances and remit the remainder of the funds in these deposits to them. They further insisted that they would not accept responsibility for any accrual of interest after 31 ^st May, 2016.

10 Mr. Tacon responded to this letter on 30 ^th June, 2016 stating that due to the current position of the bank, the funds contained in the accounts were no longer available. In particular, Mr. Tacon stated the following in his letter:

“As part of my role as administrator of the Bank, I have taken legal advice with respect to the right of the Borrowers to apply term deposit balances against their loans. I am advised that neither the loan agreements nor Anguillan law generally provides your clients with any right of set off of their term deposits against the loans .

As I have set out in previous correspondence to depositors, PBT and CCIB held their liquid, i.e. cash assets in their respective parent banks. The parent banks are now in receivership and according to publicly available information the assets of the parent bank, but not all of their liabilities, have been transferred to the National Commercial Bank of Anguilla (“NCBA”). These assets are therefore no longer available to PBT and CCIB.”

11 Despite the express threat contained within Mr. Tacon's letter that the respondents would commence legal action should the applicants fail to fulfill their obligations under the loan agreements, the applicants made no further payments towards the loans to the respective banks. Insofar as the loan from CCIB was concerned the last payment made by the applicants was on 14 ^th June, 2016. The loan from PBT was last paid on 20 ^th April, 2016. As a result of this the respondents commenced these proceedings for recovery of the debts on 5 ^th July, 2017. Given that the Applicants resided in St. Maarten the time for filing an acknowledgement of service, as stated in the Claim Form was 35 days from the date of service. It is the applicants' contention that the claim was not served on them until 18 ^th August, 2017. The respondents argue that it was served on 4 ^th August, 2017.

12 However, on 5 ^th and 6 ^th September, 2017 both the islands of Anguilla and St. Maarten were severely damaged by Hurricane Irma. Further to this, the applicants contend that one of their firm of solicitors with whom they consulted in this matter operated out of the British Virgin Islands which was hit by Hurricane Maria a few days later. For this reason, the applicants contend that they were not able to communicate with their legal practitioners until November, 2017.

13 However, despite the passage of the hurricanes a request for entry of judgment in default was filed by the respondents on 26 ^th October of that year. These requests were granted on 8 ^th November, 2017 when judgments in default of acknowledgement of service were entered by the Registrar of the High Court in Anguilla in relation to both claims. This was served on the applicants in St. Maarten on 17 ^th November, 2017. On 8 ^th December, 2017 the applicants applied to the court to have these judgments set aside.

The Law and its Application

14 The criteria for setting aside a judgment in default as contained in Part 13.3(1) of the Civil Procedure Rules 2000 is that the court may set aside a judgment entered under Part 12 only if the defendant –

• (a) Applies to the court as soon as reasonably practicable after finding out that judgment had been entered;

• (b) Gives a good explanation for the failure to file an acknowledgement of service or a defense as the same case may be; and

• (c) Has a real prospect of successfully defending the claim .

15 It is now well established that the criteria set in Part 13.3(1) is conjunctive and that an Applicant wishing to rely on this Rule must satisfy all 3 requirements in order to succeed in his application. In that regard I will examine this application by considering each limb of the rule in turn.

Have the applicants applied to the...