Court name
Supreme Court of Turks and Caicos Islands
Case number
CL 123 of 2017

Nancy Lucille Peters v. Woodville Court Limited (CL 123 of 2017) [2018] TCASC 6 (20 April 2018);

Law report citations
Media neutral citation
[2018] TCASC 6
Coram
Ramsay-Hale, CJ

CL 123/2017

IN THE SUPREME COURT

TURKS AND CAICOS ISLANDS

IN THE MATTER OF SECTIONS 72, 75 AND 77 OF THE REGISTERED LAND ORDINANCE (CAP 9.01) ("THE ORDINANCE") AND

IN THE MATTER OF A CHARGE ("THE CHARGE") OVER TITLE PARCELS 10304/139 & 10304/140, GRAND TURK CENTRAL, GRAND TURK, TURKS AND CAICOS ISLANDS ("THE PARCELL'')

BETWEEN:                               

  NANCY LUCILLE PETERS

                                       PLAINTIFF

AND 

WOODVILLE COURT LIMIETD

DEFENDANT

Before the Chief Justice, the Hon. Ms. Justice Ramsay-Hale

Ms. Jerwina Taylor of Karam & Missick for the Plaintiff

Mr. Robert D'Arceuil of Phillipson D'Arceuil for the Defendant

Heard on 7 and 13 December, 2017

 

RULING ON IN LIMINE APPLICATIONS

The Application

1.The Plaintiff, Ms. Nancy Peters, seeks an order for sale of property to recover a debt due to her secured by a Charge over property owned by the Defendant, Woodville Court Limited. The Charge is registered over two Titles to property held by the Defendant to secure the repayment of the sum of $412,500 with interest thereon.

Background

2. The brief facts are that the Plaintiff transferred property in Grand Turk to the Defendant in consideration of the sum of $550,000. The Plaintiff made a loan to the Defendant on 30 May 2008in the sum of $412,500, being the balance of purchase prIce   be repaid by way of 36 monthly installments of $3,824 and a balloon payment of all principle and nterest outstanding on the 30 May 2011. The property was transferred to the Defendant and  Charge securing the loan was registered on 1 August 2008.

3. At the time the Charge was registered, Mr. Colin Broo. - as the first named Director in theDefendant's Register of Members as well as its Secretary.His wife  Lucy and daughter Donna Marie were the other Directors.

4. It appears from the documents before the Court that all payments due under the loan agreement in 2008 were made. In 2009, 10 of 12 payments were made. In 2010, 4 of 12 payments were made. In 2011, a lump sum equal to 3 monthly instalments was paid in March. The balloon payment representing the balance due on the whole of the loan was not paid on 30 May 2011 as promised under the Agreement. The last payment on account of the loan was in the sum of $3,824 and was made in December of that year.

5. Mr. Brooker died in 2008 and his wife, Lucy, died in December 2012. The correspondence exhibited in the bundle lead to the inference that Donna Marie had taken control of the property in 2010 and had put a tremendous amount of work into it, secured investors and was making efforts to regularise the loan account.

6. 'Nonetheless, a section 72 Notice was issued by the Plaintiff's then attorneys on 18 May 2011. Ms. Brooker protested the service of the Notice which she said did not accurately reflect the sum then currently due and would, once it became public knowledge, reduce the value of the property and/or hamper her efforts to rent or sell it. She expressed the view that the Plaintiff was likely to receive all the monies due if the parties worked towards a resolution in the matter.

7. 'The loan remained in default.

8. In December 2012, the property was unsuccessfully offered for sale at public auction. In 2014, the Plaintiff commenced proceedings seeking leave to sell the property by way of private treaty.' The Defendant appeared to that summons and objected to the proceedings on divers grounds, including improper service of the Originating Summons and the Section 72 Notice. The objection was maintained 5 notwithstanding Ms. Brooker's earlier indication by letter dated 12 October 2012 that the company would peacefully yield the property to the Plaintiff if the matter remained unresolved.' The proceedings were discontinued with the leave of the Court on the application of the Plaintiff on the 1.2 March 2015.

These Proceedings

9. The Plaintiff makes a de nova application for leave to the sell the property by private treaty having ostensibly served the Defendant by post at its registered office the address for which is stated to be P.O. Box 36, Island House, Lighthouse Road, Cockburn Town, Grand Turk.

10. The proceedings are brought by way of an Originating Summons which was served on the Defendant in the same manner. The Plaintiff relies on a Certificate of Posting of the said documents to the address of the Defendant's registered office as well as a receipt signed by a postal clerk.

Page 13 of the Trial Bundle

2 See Correspondence exhibited at pages 5 and 6 of the Trial Bundle

3 Letter to Dempsey and Co ibid page 10

4 CL 214/2014

5 Affidavit of Mr. Jerry Kolodziei dated 31 October 2014 at paras 12 to 14.16 mid ZZ

6 Page 16 of the Trial Bundle

7 ibid page 146

In limine Applications

11. The Defendant by way of Notice of Motion makes two in limine applications. The first is brought under 0 2, rr 1 and 3 and seeks to set aside the statutory demand on which the application for sale by private treaty is based and to set aside the Originating Summons on the ground that neither was properly served. The second is brought under 0 21, r 5 and seeks an order staying these proceedings until the costs of the proceedings in CL 214/2014 are paid.

Service

12. The mode of service of originating process on a company is set out in section 78 of the Companies Ordinance which provides that,

"Any writ, order or other document required to be served upon the company may be served by leaving the same or sending it through the past in a pre paid letter, addressed to the company at its registered office".

 

13. The section is unambiguous and I hold that the documents having been sent by post to the Defendant at the address that it has provided for service under its section 56(1) duty to provide same, has been duly served.

14. Before leaving the issue of service of the proceedings, I would just note that the Defendant's application was brought under a Rule which specifically provides that a failure to serve, in accordance with the statutory provisions for service, does not render the proceedings a nullity which the defendant is entitled to set aside as of right.

15. The purpose of the Rule as explained by the learned authors of the White Book,

"was to abolish the distinction between non-compliance with procedural rules which renders proceedings a nullity and non-compliance which merely renders proceedings irregular" with the consequence that "a failure to comply with s 725 (1) of the Companies Act 1985, which provides that a writ may be served on a company by leaving it at or sending it by post to the company's registered office ...does not, even on the basis that s 725(1) were mandatory (a point being left open), constitute such an irregularity in the proceedings as to render them a nullity and entitle the defendant to have them set aside ex debito justitiae as non-compliance with section 725 (1) is a mere irregularity within 02 rl (1)" : note 2/1/3.

16. I concur with the view expressed in the same note that,

"02, r.1 should be applied liberally in order, so far as is reasonable and proper to prevent injustice being caused to one party by mindless adherence to technicalities the rules of procedure."

17. In the last paragraph the following appears:

"Defective service of proceedings, however gross the defect, and even more a total failure to serve where the existence of the proceedings is nevertheless known to the defendnat  is an irregularity which can be cured by the Court by the exercise of discretion under 0 2 r 1."

18.  Those observations are relevant to service of proceedings only.

19.      With respect to the service of the Section 72 Demand Notice, it is common ground that a chargee

may only commence proceedings to sell property where a demand notice has been issued pursuant to section 72 of the Registered Land Ordinance ("RLO"), served in accordance with Section 151 of the RLO and the money owing remains outstanding at the end of the time limited for payment.

20.      Section 151 provides that,

"A notice under this Ordinance shall be deemed to have been served on or given to any person

(a) if served personally,

(b)....

(c)if sent by registered post to him at his last known postal address in the islands or elsewhere and a receipt purporting to have been signed by him has been received in return;

(d) ....''

21. Mr. D'Arceuil submits that the section 72 Notice was not served in accordance with section 151

(c), as the Plaintiff asserted, as there was no receipt signed by any officer of the Defendant company. Whilst I accept this, the submission ignores the provision for personal service under subsection (a).

22. Where the person is a corporation 8 the Notice will be personally served on the corporation if it is

served in accordance with section 78 of the Companies Ordinance. It follows that the Demand Notice, served in the same manner as the Originating Summons was also properly served and I so find.

Application to stay

23.      The application to stay the proceedings until the costs in CL 124/2014 are paid would necessarily

fail on the ground that the costs have not been taxed or agreed and are, therefore, not payable. Mr. Kolodziej in his affidavit sworn on the 12 December 2017 indicated that he was not pursuing the application which stands dismissed.

Charge improperly executed and void

24.      The Court invited Mr. D'Arceuil, without waiving his objection to the alleged irregularity in service, to address the Court on the Defendant's other objections to the Plaintiffs application. In response, Mr. D'Arceuil submitted that, in addition to the service grounds, the Defendant resists the Plaintiff's application on the ground that the Charge on which the Plaintiff relies as permitting her to sell the property to recover the debt due to her, is void as it was not executed in accordance with the provisions of section 107(2)(b)(i) of the RLO.

25.      That section provides that,

"(2) Subject to subsection (2) of section 120 of this Ordinance an instrument shall be deemed to have been executed only -

(b) by a corporation -

  1. if sealed with the common seal of the corporation, affixed thereto in the presence of and attested by its clerk, secretary or other permanent officer and by a member of the board of directors, council or other governing body of the corporation; or
  2. in the case of a corporation not required by law to have a common seal, if signed by such persons as are authorised in that behalf by any law or by the statute or charter of the corporation or, in the absence of any express provision, by the persons duly appointed in writing for that purpose by the corporation, evidence of which appointment has been produced to the satisfaction of the Registrar.''

26.Mr. D'Arceuil submits that on the day the Charge was executed, the Defendant Company had three Directors and that, in order for the Charge to be properly executed by the Defendant pursuant to the provisions of the RLO, it had to be executed by two persons: either a Director and a Secretary of the Company or two Directors and not by one Director alone signing in his capacity as Director and Secretary.

27. He contends that because the Charge was signed by Colin Brooker alone it is invalid and void ab initio. No authority was cited in support of this submission which Mr. D'Arceuil submits is a matter of construction.

Discussion

28. Section 107(2)(13)(i) of the RLO requires any Instrument made by a company under that law, if made under seal, be executed, inter alio, by a Director and a Secretary. As a matter of construction, there are no words in the section 107(2)(b}(i) requiring that the Director and the Secretary be two separate persons. Indeed there could be no such requirement given that, in sole Director companies, the Director and the Secretary would be the same person.

29. Unlike some jurisdictions where the mode of execution of a document under seal by a company is prescribed by statute,' the Companies Ordinance simply provides at section 90 that any agreements entered into by the company that are required to be in writing and, under English law, made under seal, may be made on behalf of the company in writing under its common seal. It does not mandate how such instruments should be executed.

30. To determine the proper mode of execution of an instrument under seal, one has to look to the company's governing documents. In the instant case, the Defendant's Articles of Association provide, under the heading THE SEAL, that,

See for example the Corporations Act 2001. Australia

 

"121 (a) The Directors shall provide for the safe custody of the Seal and every instrument to which the Seal shall be affixed shall be signed by a Director and shall be countersigned by the Secretary or by a second Director or by some other person appointed by the Directors for the purpose."

31. I accept that the Directors were required under Article 121(a) to cause the instrument in question to be signed either by two Directors or by a Director and a Secretary, not being the same person, Their failure to do so, however, does not render the Charge void for the reason that section 107 is a deeming provision intended to provide protection for third parties dealing with a company in good faith. The section deems the Instrument to be executed by a company under seal, and therefore registrable, if it is signed by a Director and a Secretary, which the instant Charge was.

32. The effect of the section is that it is not a prerequisite for registration of a Charge under the RLO against the Defendant's Title that the instrument be executed as provided for under the company's governing documents.

33. 

Under section 64 (3) of the RLO, the Charge is completed by its registration as an incumbrance and the registration of the person in whose favour it is created as its proprietor. Once complete, the legal effect of the charge is that the debt is secured and the chargee may sell the property to recover its debt in priority to other creditors.

34. It follows then that, as the Charge in issue was executed in accordance with section 107 of the RIO and completed by registration against the Title, it is enforceable notwithstanding the instrument was not properly executed according to the Defendant company's internal rules, and will remain enforceable unless and until the register is rectified and the Charge cancelled.

35. There is no application before the Court for rectification despite the Defendant adopting the position that the Charge was not properly executed from as far back as 2014 10 nor could there be as section 140 of the RLO provides that the register shall not be rectified so as to affect the title of the proprietor of a charge for valuable consideration - the Plaintiff - unless it be shown that the proprietor knew of the mistake on which the applicant for rectification relies. Without opining on the relevance of the mistake on which the Defendant would rely in such proceedings, it seems to me that if all parties were ignorant of the requirements for execution under the Article 121 as suggested by Mr. Kolodziej 11 or if the Plaintiff had made an innocent mistake as submitted by Mr. D'Arceuil, 22 it would be difficult to argue that the Plaintiff knew of the mistake.

36. Having thus disposed of the Defendant's objection, I do not find it necessary to consider the further and alternative submissions made on behalf of the Plaintiff that the Charge, even if not properly executed, would take effect in equity, that the other members of the Defendant company had assented to the purportedly unauthorised transaction and that, in any event, the Plaintiff would nonetheless be entitled to rely on a Director's apparent authority to bind the company.

10 Affidavit of Jerry Kolodziej dated 31 October 2014 at paras 8 and 9

11 Affidavit dated 31 October 2014

12 Skeleton Argument dated 13 February 2017

Delay 

37.The Defendant also contends that the Plaintiff's application should be dismissed on the ground of delay. in support of that submission, Mr. D'Arceuil relies on Arbuthnot Latham Bank Limited and another v Trafalgar Holdings Limited and Pauline Ashton and another [1997] EWCA Civ 2999 an appeal by defendants against the first instance Judge's refusal to dismiss the plaintiff's suit to recover monies due under a guarantee executed in 1987 which they contended was unenforceable and, in the case of Mrs. Ashton, obtained by undue influence. The demand for payment was made in 1989 and proceedings incepted, but little was done to advance the matter until 1996.

38. The first instance Judge was satisfied, and the plaintiff conceded, that as the defence turned substantially on oral evidence, the passage of time might have affected the defendant's recollection of events which would impinge their oral evidence, Despite the anxiety to which the defendants had been subjected and their dimming recollection, the Judge refused to dismiss the action on the ground that a fresh action could be brought based on the mortgage which action was not statute barred. The appeal was essentially concerned with the effect of limitation periods on applications to strike out, but the principles relating to applications to strike out were restated by Lord Woolf MR delivering the judgment by reference to Birkett v James (1978) AC 297 which established that an action should be dismissed on the ground of delay only where the plaintiff's failure to act promptly has been intentional and contumelious or there has been inordinate and inexcusable delay giving rise to a substantial risk that a fair trial would not be possible or to the serious prejudice of the defendant, such as that suffered by the Ashtons in the instant case.

39. With respect to the first limb, Lord Diplock observed at p 321C/D :

"The Court may and ought to exercise such powers as it possesses under rules to make the Plaintiff pursue his action with all proper diligence, particularly where at the trial the case will turn upon the recollection of witnesses to past events ... [and] make peremptory orders providing for the dismissal of the action for non-compliance with its order...................... But where no question of non-
compliance with a peremptory Order is involved the court is not in my view entitled to treat as "inordinate delay" justifying dismissal of the action..."

40. Lord Woolf MR also restated the principle that delay alone is not a ground for dismissing an action: it must cause some prejudice to the defendant or result from some contumelious conduct on the part of the plaintiff.

41. The Defendant submits that because of the Plaintiff's delay, a fair trial is no longer possible. While it is right that two of the persons who were Directors of the Defendant at the time of the transaction and who might have given evidence relevant to it are unavailable, they have been unavailable since 2008 and 2012 respectively, through no fault of the Plaintiff. It is unclear what case their evidence might be required to support but, as the Defendant had its own attorneys in the transaction, it seems to me, in the absence of any evidence to the contrary, that those attorneys would be able to speak to the transaction and produce such documents as might be required. The submission that a fair trial (of an as yet unpleaded case) is not possible is not made out.

42. No other prejudice to the Defendant arising from the delay is asserted.

43. A review of the Plaintiff's conduct of these proceedings does not disclose that the Plaintiff has acted with such disregard for the rules that she should be driven from the Court, particularly in the circumstances where the putative delay has caused no injustice to the Defendant.

44. The Defendant's submission that the proceedings should be struck out on the ground of delay has no merit.

Summary 

45. The Defendant's application to set aside service of the section 72 Notice and the Originating Summons is dismissed as the Notice was personally served on the Defendant as required by section 151(a) of the RLO and section 78 of the Companies Ordinance.

46. The application to stay the proceedings on the ground that costs in CL214/2014 have not been paid is dismissed as the costs, not having been taxed or agreed, are not payable.

47. The Defendant's challenge to the validity of the Charge on the ground that it was not executed in accordance with the Defendant's Articles of Association is dismissed, as the Charge was validly executed pursuant to section 107(2)(b)(i) of the RLO and its registration completed. The Plaintiff is therefore entitled, on proof of default in payment of the debt secured by the Charge, to sell the property to recover the sums due to her.

48. There is no merit in the Defendant's complaint that the Plaintiff is guilty of such delay that her application to sell by private treaty under the Charge should be struck out as the delay was not contumelious and there is no prejudice to the Defendant in any event.

49. I will hear Counsel on costs and on the Orders consequential on the judgment of the Court.

DATED 20 APRIL 2018

Ramsay-Hale,CJ