La Chausseur Beachettes Grenada Ltd v Lewis Colton John Thomas Defendants/Appellants v Eversley William Gittens Plaintiff/Respondent [ECSC]

• Jurisdiction: Grenada
• Judge: HAYNES, P.
• Judgment Date: 26 May 1983
• Judgment citation (vLex): [1983] ECSC J0526-1
• Court: Court of Appeal (Grenada)
• Docket Number: CIVIL APPEAL NO. 1 OF 1982
• Date: 26 May 1983

[1983] ECSC J0526-1

IN THE COURT OF APPEAL

(CIVIL JURISDICTION)

Before:

The Honourable Mr. Justice J. O. F. Haynes, P.

The Honourable Mr. Justice N. Liverpool

The Honourable Mr. Justice F. G. Smith

CIVIL APPEAL NO. 1 OF 1982

Between:

La Chausseur Beachettes Grenada Limited

and

Lewis Colton John Thomas

Defendants/Appellants

and

Eversley William Gittens

Plaintiff/Respondent

Appearances:

H. M. Squires for Appellants.

C. A. St. Bernard for Respondent.

HAYNES, P.

1 In this judgment with which Liverpool J.A. and Smith J.A. concur, I shall refer to the respondent as "the plaintiff", to the appellants jointly as "the defendants" and to them separately as "the Company" and "the defendant Thomas".

The Facts:

2 Although, the defendant Thomas' sister and his daughter were the majority shareholders of the company, he, as managing director, was their man of business. He and the plaintiff knew each other well. Each in his field was an experienced man; the former, as a real estate agent, and the latter as a "financier", his own description of his occupation. Prior to 1972, they had a number of financial transactions including mortgages of the sister's Corinth Estate for $115,000 in 1970 and of the defendant Thomas' La Tante property for $36,000 in 1971.

3 On 23rd lay, 1972, the defendant Thomas for and on behalf of the Company signed a demand promissory note in favour of the plaintiff for $66,300 to bear interest at 10 percent; on 3rd April, 1973, another one was signed by him for $86,100 also to bear interest at 10 percent then a third on 24th October, 1974, for $120,000 to bear interest at 12 ¹/₂ percent. Finally, as far as this litigation is concerned, on 12th September, 1975, a fourth one was signed for $155,000 to bear interest at 3 percent. But this time the plaintiff obtained real security. For, on the same date, an indenture of legal mortgage of the Company's property to secure payment of that sum was executed by the Company as Borrower, the defendant Thomas as Surety and the plaintiff as Lender. I set out below material portions of the Deed:

"WHEREAS

• 1. The Company is seized in unencumbered fee simple in possession of the property described in the schedule hereto.

• 2. The surety is the managing director of the Company engaged in the development of a resort property called or known as "La Chausseur" situate in the parish of Saint David in Grenada.

• 3. The Lender has from the time advanced to the surety various sums of money amounting in the aggregate to the sum of one hundred and fifty five thousand dollars ($155,000.00) evidenced by promissory notes but otherwise unsecured.

• 4. The Company hereby expressly admits that the surety acted at all material times as the agent of the Company having borrowed the said sum of money for and on behalf of the Company and expended the same on the development of the aforesaid property called or known as "La Chausseur".

• 5. The said, sum of one hundred and fifty thousand dollars ($155,000.00) is still outstanding and owing by the Surety and the Company to the Lender.

• 6. At the request of the Company and the Surety the Lender has agreed to forbear in the collection of the said debt on condition that the Company furnishes him with further and additional security in manner hereinafter appearing.

NOW THIS INDENTURE WITNESSETH AS FOLLOWS:—

In consideration of the sum of one hundred and fifty-five thousand dollars ($155,000.00) advanced to the surety for and on behalf of the Company (the receipt whereof the Company and the payment whereof as aforesaid the surety hereby respective acknowledges) the Company and the surety jointly and severally covenant with the Lender to pay to the Lender on the thirty-first day of December one thousand nine hundred and seventy six the said sum of one hundred and fifty five thousand dollars ($155,000.00) with interest thereon from the date hereof at the rate of three dollars per centum per annum.

For the consideration aforesaid the Company as beneficial owner hereby conveys unto the Lender all that property originally part of La Sagesse Estate and now forming part of the property called or known as "La Chausseur" situate in the Parish of Saint David in the island of Grenada which is described In the Schedule hereto TO HOLD the said property UNTO AND TO THE USE of the Lender in fee simple subject to the proviso for redemption hereinafter contained."

4 Sir Dennis Henry, a quite reputable solicitor, handled the legal formalities, and the defendant Thomas paid the expenses of $2,500.

5 Nothing was paid on to 31st day of December, 1976, either as capital or as interest. So the plaintiff launched these proceedings to recover $161,420.82 as the sum due for such capital and interest to that date, together with interest on the capital sum of $155,000 down to date of payment of the judgment. He claimed personal judgment against the defendants, and in default of payment, leave to enforce the security. In defence, the defendants admitted the mortgage, but not the non-payment of capital or interest. They pleaded that, on grounds to be discussed later in this judgment, all the transactions including the mortgage were moneylending ones, and were harsh and unconscionable; so they should be reopened and, either set aside and the $2,500refunded, or, payment there under should be adjusted to a lesser sum to be paid as capital and interest. They claimed to be entitled to such relief both at law and in equity.

The Case for the Plaintiff:

6 At the trial which opened over three years later, only the plaintiff and the defendant Thomas gave evidence. Unfortunately, perhaps, Sir Dennis Henry was then no longer resident here in Grenada. The plaintiff's examination-in-chief was brief. He tendered the mortgage deed and said:

"The sum of $155,000 is a total culminating sum of money lent to defendants over a period of time on different pronotes. The pronotes presented to his lawyer by the No. 2 defendant when this mortgage was being executed consisted of one for $66,300 another for $86,100 and another for $120,000 and the final one made up the day we went to the lawyer was $155,000. 00 Ex. EW.G. 1 is the mortgage securing that note. All these were retired when E.W.C. 1 was prepared."

7 The cross-examination, in effect, reopened the transaction. Under it, the plaintiff gave his account of the circumstances of each. He said:

"The pronote for $155,000 was made up very day we went to the lawyer 12th September, 1975. The pro-note was made up earlier in the day and the mortgage E.W.G. 1 later in the said day…Previous to that there was a pronote for $120,000 dated 24th October, 1974, and 12th September, 1975 the interest on $120,000 was 12 ¹/₂ percent per annum. The figure reached $155,000 because interest on a previous mortgage of $36,000 at rate of 12 ¹/₂ percent and interest on the $86,100 note at 12 ¹/₂ percent and an additional loan of $20,000. He gave me a post dated cheque and I gave his my cheque for that amount. That post dated cheque was issued by No. 2 on 23rd May, 1972. I gave him mine same day. The cheque was post dated to be cashed a year after…The $20,000 is included in the $120,000. There was also a $7,000 loan. This was at the end. I never went to No. 2 Defendant's home to see him when he was sick and ask him to sign E.W.C. 1…I did visit when he was sick. We are pals. On that visit it was not to do business.

No. 2 gave me note in 1973 for $86,100. There are figures at the back of the document. I see the photocopy of the note. It was my handwriting at the back. I see written there $36,000 at 12 ¹/₂ per cent from 3rd April, 1973 to 3rd, April, 1974. That was not taken into account, we scratched that out. All we took into consideration was interest on the $36,000 and the $20,000 cheque. From the time the defendant had $20,000 to date of $120,000 note interest on the $20,000 at 10 percent per annum was about $4,800. That post dated cheque was never cashed, No. 2 defendant took it back and involved it in the $120,000 mortgage. Interest that is included in the $155,000 is calculated from pronotes of $120,000 mortgage. E.W.C. 1 Photocopy of pronote for $86,100. Harked "A" for identification. On back of that note has figures for computation of $120,000.

No. 2 gave a pronote for $120,000…I told him we should put all our bits and pieces together. We should bring in the $20,000 cheque and interest, I had a credit for him at that stage for interest that was calculated on the Corinth mortgage. That was about $10 or $12,000. There was also interest due on La Tante mortgage. When everything was taken into consideration it worked out to a little less than $120,000…When No. 2 gave me pronote for $155,000 I gave him back pronote for $120,000.

On 3rd April, 1973, I gave No. 2 a memo signed by me in relation to some interest. This is the memo marked "B" for identification. As at 3rd April, 1974, interest due on La Tante and Corinth were included in the $86,100; Principal $66,300 for which there was a pronote also interest thereon. The $66,300 note was given back to No. 2 when note for $86,100 was executed. All these prior notes were brought into to Mr. Henry's office when $155,000 mortgage was being executed.

The $66,300 was an accumulation of prior mortgages, previous pronotes and interests. The correctness of the $66,300 was settled with No. 2 before note for that amount was issued. Interest on $66,300 which was in $86,100 would be from date of execution of $66,300 note to date of $86,100 pronote. Not true the $66,300 included a cheque for $25,000. A $55,000 pronote came into the $66,300…

All the accounts I kept ware the mortgage deeds, pronotes and the post dated cheques. We were in a good understanding. No. 2 never asked me for an account except when the big case came. No. 2 then asked me for post dated cheques, whatever documents, cheques, notes i found I gave to my lawyer. On pronote of 23rd day, 1972, no money...